Eurozone Inflation Hits 3.3% as Energy Prices Soar

Eurozone inflation surged to 3.3% in August, outpacing the European Central Bank's (ECB) target of 2%. The jump was expected by economists polled by Reuters, but not as high as estimated by some German state banks.

Energy prices were the main driver of inflation, rising 14.3% year-over-year in August. Industrial goods increased by 1.2%, while services eased slightly from 3.3 to 3.0%. Core inflation, excluding volatile items like energy and food, edged down to 2.4%.

Austria's inflation rate also mirrored the eurozone picture, climbing to 3.2% in August from 2.8% in July, with fuel and heating oil pushing prices up. Services contributed significantly to the increase, rising by 4.3% due to their higher weight in the basket.

Central bankers have signaled a preference for higher interest rates, including German ECB Executive Board member Isabel Schnabel, who publicly called for a September rate hike. Austrian central bank governor Martin Kocher also stated that upside risks to inflation have risen again and could justify further rate increases.