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LONDON – Inflation in the euro area rose again in August, before a crucial European Central Bank meeting in just over a week.
Consumer prices rose 3% this month from a year ago, according to preliminary estimates released on 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 its highest inflation rate in nearly three years on Tuesday.
The ECB, which will meet on 9 September, is expected to discuss the future of its asset purchase program, as its governing board seems divided on when to start easing stimulus measures.
Speaking on Monday, French central bank Governor Francois Villeroy de Galhau said the ECB should take into account the recent economic recovery when discussing what to do with its Covid stimulus package.
Meanwhile, Finnish central bank governor Olli Rehn said in an interview with Politico last week that the central bank must be cautious when withdrawing the stimulus.
The minutes of the last ECB meeting showed that some members believed that the bank’s stance underestimated the risk of higher inflation.
Tuesday’s higher inflation figures are likely to put pressure on eurozone central bankers, especially when combined with comments from the US Federal Reserve, which is considering lifting the stimulus before the end of the year. .
The ECB’s mandate is to achieve 2% general inflation in the medium term. Their own forecasts currently project an increase in inflation this year to 1.9%, due to what they describe as temporary factors, before falling to 1.5% and 1.4% in 2022 and in 2023, respectively.