European Inflation Pressure Mounts as Energy Costs Soar

Rising energy costs are fueling inflation pressure across Europe as tensions in the Middle East heighten risks to energy supplies.

International oil prices climbed to six-week highs on Thursday, with Brent crude briefly rising above $97 a barrel and West Texas Intermediate (WTI) crude climbing to nearly $93 a barrel.

The European gas market is also under pressure, with EU gas storage facilities at 65.6 percent full, the lowest level for this time of year since records began around 15 years ago. European gas prices have risen by more than 75 percent over the past two months, reaching their highest level in more than three years.

The impact of higher energy costs is already visible in Europe's latest inflation data, with annual inflation in the eurozone expected to rise to 3.3 percent in August from 2.9 percent in July. Energy prices rose 14.3 percent year on year, accelerating from a 10.3-percent increase in July.

The pressure is increasingly being felt by households and businesses, with Alain Durre, chief European economist at Natixis, saying that increases in diesel, gasoline, and food prices would directly affect consumers.