Euro area inflation rose to 3.3% in August from 2.9% in July, according to a flash estimate published by Eurostat on Tuesday, driven by a rise in energy prices. Finland moved in the opposite direction, with annual inflation easing to 2.4% from 2.5% a month earlier.

Energy prices in the euro area increased by 14.3% from a year earlier, compared with a 10.3% annual rise in July.

Services inflation slowed to 3.0% from 3.3%, while prices for non-energy industrial goods rose by 1.2%, up from 0.9%. Food, alcohol and tobacco inflation remained at 1.2%.

Inflation excluding energy, food, alcohol and tobacco stood at 2.4%, down from 2.5% in July. The measure is followed by central banks because it removes some price categories that tend to move more sharply from month to month.

The euro area figure remained above the European Central Bank’s 2% medium-term inflation target.

Financial markets expect the ECB to raise its policy rate by 0.25 percentage points at its next meeting. 

Nordea economists Jan von Gerich, Tuuli Koivu and Anders Svendsen said in a company release that the rise in inflation was likely to prompt another ECB interest rate increase at its September meeting. They expect the central bank to continue raising rates at quarterly intervals as energy costs remain elevated and inflation stays above its 2% target.

The economists said the decline in services inflation offered some relief, while price pressures outside energy were spreading at a slower pace. They also pointed to the war in the Middle East and low natural gas inventories as risks to energy prices during the winter.

Eurostat data showed wide differences between member states. Lithuania recorded the highest estimated annual inflation rate at 5.8%, followed by Cyprus at 5.2% and Bulgaria at 5.1%.

Estonia had the lowest rate at 1.3%, while Malta stood at 1.9%. Finland’s 2.4% rate was also below the euro area average.

Statistics Finland confirmed the preliminary Finnish harmonised inflation figure at 2.4% in August. Prices fell by 0.4% from July.

Transport recorded the largest annual increase among the Finnish categories measured in the harmonised index, with prices up 7.4% from a year earlier.

Education services rose by 5.8%, while furnishings, household equipment and routine household maintenance increased by 5.0%.

Food and non-alcoholic beverages increased by 1.7% from August 2025. Housing, water, electricity, gas and other fuels rose by 1.4%.

Prices for clothing and footwear fell by 1.7% year on year, while personal care, social protection and miscellaneous goods also declined by 1.7%.

The Harmonised Index of Consumer Prices differs from Finland’s national consumer price index because it excludes costs including owner-occupied housing, interest on consumer credit and vehicle tax.

Eurostat will publish the full August inflation data for the euro area and member states on 17 September.

HT