Inflation across the eurzone rose more than expected in August, hitting its highest level in four month, fuelling expectations that the European Central Bank might soon begin winding down its massive monetary stimulus programme.
Official flash estimates on Thursday showed that consumer prices in the region had risen by 1.5 per cent in August, compared to the same month last year, up from an increase of 1.3 per cent in July. Forecasters had been expecting a 1.4 per cent rise.
The rate is the highest since April’s 1.9 per cent. The ECB has an official target of getting inflation to just below 2 per cent.
Stripping out unprocessed food and energy prices – two categories considered to be the most volatile – inflation was stable at 1.3 per cent for the month, slightly above the 1.2 per cent expected.
The ECB is due to hold its regular policy meeting and press conference next week and some analysts said that Thursday’s figures would likely heap pressure on the governing council to tighten the banks still very loose monetary policy.
The ECB is currently still implementing a €2 trillion asset purchase programme, begun in 2015, which was designed to stave off the threat of deflation. Under the programme the bank is buying sovereign and corporate bonds that adhere to specific criteria.
In recent months, signs of recovery in the bloc, coupled with indications that the ECB is running out of some assets to buy, have sparked forecasts that it might soon start tapering the €60bn a month plan.
Also on Thursday, official figures showed that the unemployment rate in the eurozone was 9.1 per cent in July, unchanged from June. That’s the lowest rate since February 2009.
