Europe's Inflation Surge: Energy Prices Drive Rate Hikes

Energy price surges have driven inflation in France and Spain to new highs. In August, the annual rate of price growth in Spain hit 4.5%, its highest since February 2023. The country's EU-harmonised consumer price index rose from 3.9% in July.

Meanwhile, data from France showed that the annual change in the EU-harmonised CPI jumped to 2.7% this month from 2.4% in July, its highest since May.

The indicators may strengthen the call for the European Central Bank to raise interest rates at its September meeting, as investors widely expect a 25 basis point increase to 2.5%.