Eurozone Inflation Hits 6-Month High as Energy Prices Soar

Headline inflation in the Eurozone jumped to 3.3% in August, marking its highest reading since the start of the Middle East conflict six months ago.

The increase was driven by higher energy prices, with year-on-year growth now at 14.3%. Goods inflation also rose to 1.2%, while food inflation remained stable at 1.2%. Services inflation dropped back to 3% from 3.3% in the previous month.

However, core inflation, which excludes volatile energy and food prices, remained surprisingly benign at 2.4%, exactly where it was in February before the conflict began.

The European Central Bank may view the jump in headline inflation as a reason to consider a September hike, but the stubbornly low core rate could lead to a debate about subsequent hikes into restrictive territory.