Inflation in the euro area in August at 3.2 percent

Berlin. Inflation in the euro area, driven by the oil price shock, was not quite as high as expected in August. Consumer prices rose by 3.2 percent, after 2.9 percent in July, the EU statistics office announced on Thursday. An earlier estimate said 3.3 percent for August.

The European Central Bank responded to the surge in inflation last week and raised interest rates by a quarter point to 2.5 percent. It expects that overall inflation will remain well above the central bank's target of 2.0 percent until the first half of 2027.

Energy is the number one price driver: it rose by 14.3 percent in August compared to the same month last year. The ECB wants to prevent the oil price shock from permanently disrupting the price structure through so-called second-round effects: The energy costs for consumers and companies driven up by the Iran war pose the risk of a wage-price spiral occurring and high inflation becoming entrenched. There is speculation on the financial markets that the ECB will raise interest rates again at the end of the year.

Chief economist Daniel Hartmann from Bantleon AG sees upside risks in numerous areas: "In the case of food, the second-round effects - higher transport and packaging costs, more expensive agricultural raw materials, drought - from an energy price shock typically only take effect with a delay of six to nine months."