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Eurozone inflation remains unchanged in August

August 31, 2023

Despite a drop in energy prices, the European Central Bank said inflation in the 20 Eurozone countries was steady at 5.3% in August. The bank might pause its periodic rate hikes, which it had adopted to slow inflation.

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A huge euro logo is seen in front of the headquarters of the European Central Bank (ECB) on June 13, 2005 in Frankfurt, Germany.
Inflation in the 20 countries making up the Eurozone remained unchanged in AugustImage: Ralph Orlowski/Getty Images

Eurozone inflation remained unchanged at 5.3% in August, the European Central Bank (ECB) announced on Thursday.

For the past 13 months, the ECB has consistently raised interest rates, in an effort to keep inflation in check. Analysts expect the bank might now consider pausing this policy, with a visible slowdown in economic growth. 

The bank's next meeting is due on September 14.

What do the latest numbers say?

The consumer price index for the Eurozone was supported by a 9.8% price increase in food, alcohol and tobacco prices since last August. Meanwhile core inflation, which doesn't include fuel and food, eased to 5.3% in August, from 5.5%.

Fuel prices fell 3.3%, as global oil prices remained flat and the summer took the demand off heating fuel.

"The small upside surprise to euro-zone headline inflation in August was entirely due to energy, while the core rate edged down. We don't think these data will tip the balance of opinion at the ECB decisively toward a hike or a hold at the meeting," said Jack Allen-Reynolds, deputy chief Eurozone economist at Capital Economics.

European Central Bank President Christine Lagarde has said the interest rate decision in the next ECB meeting will depend on incoming data. Previously, the bank would announce rate increases ahead of time.

The Eurozone's growth has been impacted by its largest economy, Germany. The International Monetary Fund projects Berlin to be the only major economy to shrink this year, down 0.3%.

rmt/rt (AFP, AP, Reuters)