{"id":611360,"date":"2026-09-01T16:40:12","date_gmt":"2026-09-01T16:40:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/611360\/"},"modified":"2026-09-01T16:40:12","modified_gmt":"2026-09-01T16:40:12","slug":"euro-zone-inflation-jumps-to-3-3-paving-way-for-ecb-rate-hike-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/611360\/","title":{"rendered":"Euro zone inflation jumps to 3.3%, paving way for ECB rate hike \u2013 The Irish Times"},"content":{"rendered":"

Higher energy costs drove euro zone inflation back above 3 per cent in August, paving the way for another European Central Bank (ECB)<\/a> rate hike next week.<\/p>\n

Price growth across the bloc accelerated to 3.3 per cent last month, up from 2.9 per cent in July, driven almost entirely by higher oil and gas prices, data from Eurostat indicated.<\/p>\n

The latest figures are consistent with the ECB\u2019s own expectations and suggest that a widely anticipated increase in the deposit rate to 2.5 per cent next week will be a relatively easy decision. It would be the bank\u2019s second move this year after a \u200bhike in June. <\/p>\n

Markets have already priced in the move with the focus now firmly on what happens down the \u200cline amid a complicated geopolitical backdrop with the US and Iran still on a war footing.<\/p>\n

Policymakers will take heart from the fact that underlying price pressures remained modest, suggesting the second-round effects of higher energy prices are not as widespread as many feared.<\/p>\n

The Eurostat figures indicated core inflation \u2013 which \u2060exclude volatile food and fuel prices \u2013 eased to 2.4 per cent last month from 2.5 per cent as growth in services prices, the single biggest \u200ccomponent \u200cof \u200bthe consumer price basket, slowed to 3 per cent from 3.3 per cent.<\/p>\n

Financial markets see two more rate hikes in the next year on the premise that higher energy prices \u200cwill eventually start seeping into broader \u2060price setting, especially since the war in Iran is showing no signs of winding down, keeping inflation high.<\/p>\n

Natural gas prices are also rising while the broader economy has also proven resilient to the economic stress of wars, tariffs, and \u200chigher rates, so the ECB may need to do more to stem price pressures, some economists argue.<\/p>\n

In addition, global peers, including the US Federal Reserve, may also be \u200bforced into rate increases, boosting market bets for a global rate-hike cycle.<\/p>\n

Still, even if the \u200bECB is forced into further hikes, there appears to be little urgency in follow-up moves, so policymakers may skip the October meeting and focus on the next round of economic projections in December.<\/p>\n

\u201cThe sharp rise in headline inflation contrasts with a drop in underlying measures of price increases,\u201d David Powell, senior euro-area economist, told Bloomberg.<\/p>\n

\u201cThat divergence supports our view that the ECB is unlikely to tighten by as much as financial markets are currently pricing in,\u201d he said.<\/p>\n

\u201cA cooling labour market should limit the pass-through of higher commodity prices into goods and services inflation more broadly, although a more persistent energy shock could still put another hike \u2013 potentially in December \u2013 on the table,\u201d he said.<\/p>\n

ECB board member Isabel Schnabel told Bloomberg last week that borrowing costs must rise further to bring price gains back to target. Other policymakers have expressed similar views.<\/p>\n

Higher energy prices drove Irish inflation to 3.4 per cent in August, the highest level in three months, according to the latest Harmonised Index of Consumer Prices (HICP).<\/p>\n

\u2013 Additional reporting: Reuters and Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"Higher energy costs drove euro zone inflation back above 3 per cent in August, paving the way for…\n","protected":false},"author":2,"featured_media":611361,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[72,943,12965,61,5232,60,16487],"class_list":["post-611360","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-cost-of-living","tag-european-central-bank-ecb","tag-ie","tag-interest-rates","tag-ireland","tag-mortgages"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/611360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=611360"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/611360\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/611361"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=611360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=611360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=611360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}