Eurozone Inflation Hits New High Ahead of ECB Rate Decision

The inflation rate in the eurozone has hit a new high, surpassing analysts' forecasts and fueling expectations that the European Central Bank (ECB) will raise its key interest rate at its meeting on September 9.

The main driver of price rises is the energy sector, which saw a year-on-year growth rate of 14.3% in August, compared to 10.3% in July. This increase is largely due to escalating tensions in the Middle East and rising oil prices.

Headline inflation rose from 2.9% in July to 3.3% in August, while core inflation (excluding energy and food) fell to 2.4% from 2.5%. Food prices showed steady growth at 1.2%, but experts warn that the secondary effects of high energy prices will inevitably manifest themselves in manufacturing and retail sectors.

Analysts at Oxford Economics note that a September rate rise is almost inevitable, citing the need for the ECB to address the pass-through of energy costs to related sectors of the economy.