ECB rate hike fears rise as Eurozone inflation holds stable

(Sharecast News) - Consumer prices in the Eurozone area increased more than expected in August, raising concerns that the European Central Bank may act once again to bring down stubbornly high inflation with another interest-rate rise. Just two weeks ahead of the ECB's next policy meeting on 14 September, Eurostat announced that the consumer price index increased 5.3% on last August, in line with July's reading but ahead of the 5.1% level expected by economists.

Ahead of the results on Thursday, analysts at Danske Bank said that a higher-than-expected reading "could add support to the case of a final 25bp rate hike from the ECB in September".

According to Eurostat, food, alcohol and tobacco prices were up 9.8% year-on-year, down from 10.8% in July, services were up 5.5% (July: +5.6%) and non-energy industrial goods were up 4.8% (July: +5%).

However, the decline in energy prices eased to -3.3%, compared with a 6.1% fall in July.

Core inflation, which doesn't include more volatile items like energy, food, alcohol and tobacco, fell to 5.3% as expected, from 5.5% in July.

Across the euro area, Slovakia and Croatia experienced the highest levels of headline annual inflation this month, at 8.5% and 9.6%, respectively. Spain and Belgium saw the lowest year-on-year increases in prices, both at 2.4%.