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Inflation Rises to Annual 3% in Euro Area as Fuel Costs Edges Up

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Euro. Pile from packs of money. 3d

The 19 countries that use the euro currency saw inflation jump to an annual 3.0% in August, up from 2.2%, as fuel prices increased sharply.

Source: Eurostat

 

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The increase was largely attributable to one-time factors that reduced prices a year ago, but it could still discourse on whether recently higher inflation is merely transitory or likely to remain.

The higher inflation data revealed on Tuesday by EU statistics agency Eurostat also shows other transitory factors, such as the timing of summer retail sales in Italy and France and the end of German tax breaks on retail purchases.

Higher oil prices, following a price decline a year ago, led to a 15.4% increase in energy costs, with the core inflation rate at 1.6%.

Economists have identified a series of extra reasons for recently higher prices in Europe. Some hotels and tourist businesses have increased prices after the end of pandemic lockdowns.

Supply chain disruptions and increased raw material prices have increased prices for producers of goods as economic activity has increased. The central bank’s most recent projections from June forecasts inflation hitting 1.9% for all of this year and dropping to 1.5% next year.

 

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