Eurozone Inflation Remains Elevated as Energy Costs Soar

Eurozone annual inflation accelerated to 3.2% in August 2026, matching May’s two-and-a-half-year high but coming in slightly below the preliminary estimate of 3.3%. The rate remained well above the ECB’s 2% target, driven largely by a surge in energy prices amid continued fighting in the Middle East. Energy inflation jumped to 14.3%, its highest since January 2023, while inflation for unprocessed food and non-energy industrial goods also accelerated. Services inflation, however, eased to a four-month low of 3.0%, while core inflation, excluding energy and food, edged down to 2.4% from 2.5%. Among the euro area’s largest economies, inflation accelerated in Germany to 2.9% from 2.8%, France to 2.6% from 2.4%, Spain to 4.6% from 3.9%, and Italy to 3.2% from 2.9%. The Netherlands was an exception, with inflation easing to 2.8% from 3.0%.

Eurozone annual inflation accelerated to 3.3% in August 2026 from 2.9% in July, in line with market expectations, according to preliminary estimates. The rate reached its highest level since September 2023 and remained well above the ECB’s 2% target, driven largely by a surge in energy prices amid continued fighting in the Middle East. The data strengthened expectations for an ECB rate hike as soon as this month, with markets fully pricing a 25-basis-point increase to 2.5%. Energy inflation jumped to 14.3%, its highest since January 2023, while unprocessed food and non-energy industrial goods inflation also accelerated. Services inflation, however, eased to a four-month low of 3.0%, while core inflation, excluding energy and food, edged down to 2.4%, below forecasts of 2.5%. Among the euro area’s largest economies, inflation accelerated in Germany to 2.9% from 2.8%, France to 2.7% from 2.4%, Spain to 4.5% from 3.9%, and Italy to 3.2% from 2.9%.

Eurozone annual inflation accelerated to 2.9% in July 2026, in line with flash estimates, up from 2.8% in June and remaining well above the European Central Bank's 2.0% target, final data showed. The increase was largely driven by a renewed surge in energy prices, with energy inflation accelerating to 10.3% from 8.5% as hostilities between the US and Iran resumed. Underlying price pressures also strengthened. Services inflation edged up to 3.3% from 3.2%, while inflation for non-energy industrial goods rose to 0.9% from 0.7%. In contrast, food, alcohol, and tobacco inflation eased to 1.2% from 1.5%. The core inflation rate, which excludes energy and food, increased to 2.5% from 2.4%. Among the euro area's largest economies, inflation accelerated in Germany (2.8% vs 2.4%), France (2.4% vs 2.0%), Spain (3.9% vs 3.6%), and the Netherlands (3% vs 2.5%), while easing slightly in Italy (2.9% vs 3.0%).