Euro zone inflation accelerated to a 10-year high in August, the European Union’s statistics office confirmed on Friday, as a global recovery pushed energy prices even higher.
Eurostat said consumer prices in the 19-nation bloc rose 3.0% in August year-on-year, after a 2.2% rise in July, confirming its earlier estimates released on Aug. 31. It was the highest rate since November 2011. Month-on-month inflation in the bloc rose 0.4%, also in line with Eurostat’s initial estimate. The surge is a challenge to the European Central Bank’s benign view on price growth and commitment to look past what it deems a temporary increase beyond its 2% target.
The central bank has repeatedly raised its inflation projection this year only for the actual numbers to beat it, and price growth now seems likely to peak only in the final months of the year, with analysts putting the peak at 3.5% to 4%. Core inflation also surged in August.
The figure excluding volatile food and fuel prices jumped to 1.6% on an annual basis from 0.9% in July, confirming Eurostat’s earlier estimates. An even narrower measure, which excludes also alcohol and tobacco prices, also climbed to 1.6% from 0.7%, again in line with the initial estimate.
The higher rate in July was largely due to a spike in energy prices, which Eurostat said on Friday rose 15.4% on an annual basis, the highest increase this year. Energy prices contributed 1.44 percentage points to the total 3.0% rate in August, Eurostat said.
Food, alcohol and tobacco prices were 2.0% higher year-on-year, Eurostat confirmed, whereas prices in the services sector, the largest in the euro zone economy, increased by a modest 1.1%.