Energy costs push Eurozone CPI past forecasts in August

The cost of living in the euro area increased in August on the back of higher prices for energy and processed food, alcohol and tobacco.

At the headline level, gains in Eurozone consumer prices accelerated from a year-on-year clip of 1.3% to 1.5%, according to Eurostat.

That was as expected by economists.

Energy costs rose the quickest, with the pace of price increases rising from 2.2% in July to 4.0% for August, while those of processed food, alcohol and tobacco advanced at a 2.0% clip, up from 1.9% in the month before.

The rate of gains in ‘core’ prices on the other hand was unchanged at up by 1.2%, the same as in July.

Commenting on Thursday’s figures, Jennifer McKeown at Capital Economics said: “The core rate (exc. food and energy) was flat at 1.2%, but note that this is higher than the rates of below 1% seen for much of the past few years.

“[…] But the Bank will need to tread very cautiously given still low inflation expectations and the strength of the euro exchange rate. We think that it will bide its time after its meeting next week before announcing a gradual asset purchase taper in October.”

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