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LONDON – Inflation in the Eurozone has risen again in August, ahead of a major meeting of the European Central Bank in just over a week.
Consumer prices rose 3% yoy this month, according to preliminary estimates released Tuesday, after rising 2.2% in July.
It comes after Germany reported its highest consumer prices since 2008 on Monday with a headline inflation rate of 3.4% in August. France also reported the highest inflation rate in almost three years on Tuesday.
The ECB, which will meet on September 9, is expected to discuss the future of its asset purchase program as its Governing Council disagrees on when to start easing stimulus measures.
French central bank governor Francois Villeroy de Galhau said Monday the ECB should consider the recent economic recovery when discussing its Covid stimulus package.
Meanwhile, Finnish central bank governor Olli Rehn said in an interview with Politico last week that the central bank needs to be cautious in withdrawing incentives.
Minutes from the last meeting of the ECB showed that some members felt that the bank’s stance underestimated the risk of higher inflation.
Tuesday’s higher inflation numbers are likely to put pressure on eurozone central bankers, especially when combined with comments from the US Federal Reserve considering lifting stimulus measures before the end of the year.
The ECB’s mandate is to achieve headline inflation of 2% over the medium term. The company’s own forecasts currently forecast an increase in inflation to 1.9% this year due to so-called temporary factors, before falling to 1.5% and 1.4% in 2022 and 2023, respectively.
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