Energy Prices Are Pushing Euro Zone Inflation Up Fast, and the ECB Is About to React

TLDR

• Euro zone inflation rose to 3.3% in August, up from 2.9% in July, driven by energy prices
• Energy inflation jumped to 14.3%, linked to the Iran war and disruption in the Strait of Hormuz
• Core inflation actually fell to 2.4%, and services inflation eased to 3.0%
• Markets are pricing in a 98.9% chance of a 0.25% ECB rate hike on September 10
• Small and medium businesses face pressure from both high energy costs and rising borrowing costs

Euro zone inflation climbed to 3.3% in August, its highest level since September 2024. The jump was driven almost entirely by rising energy costs, according to data from Eurostat released Tuesday.

🇪🇺LATEST: Eurozone inflation just surged to its highest level in nearly THREE YEARS.

Inflation jumped from 2.9% to 3.3% in August, marking the sixth straight month above the ECB’s 2% target as the Iran war keeps energy prices elevated.

Core inflation FELL to 2.4%, while… pic.twitter.com/DMaTxXwNh2

- Coin Bureau (@coinbureau) September 1, 2026

Energy inflation hit 14.3% in August, up from 10.3% in July. The increase is tied to disruption in oil and gas markets caused by the war involving Iran and the blockage of the Strait of Hormuz.

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