FX.co ★ Eurozone Inflation Hits Highest Since 2023

Eurozone annual inflation rose to 3.3% in August 2026, up from 2.9% in July, in line with market expectations, according to preliminary estimates. This marked the highest rate since September 2023 and kept inflation well above the ECB’s 2% target, driven primarily by a sharp increase in energy prices amid ongoing conflict in the Middle East. The figures reinforced expectations that the ECB could raise interest rates as early as this month, with markets fully pricing in a 25-basis-point hike to 2.5%.

Energy inflation surged to 14.3%, its highest level since January 2023, while inflation for unprocessed food and non-energy industrial goods also picked up. By contrast, services inflation eased to a four-month low of 3.0%, and core inflation—excluding energy and food—edged down to 2.4%, slightly below the forecast of 2.5%.

Among the largest economies in the euro area, inflation accelerated in Germany to 2.9% from 2.8%, in France to 2.7% from 2.4%, in Spain to 4.5% from 3.9%, and in Italy to 3.2% from 2.9%.