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LONDON — Inflation in the euro zone rose again in August, ahead of a crucial European Central Bank meeting in just over a week’s time.
Consumer prices increased by 3% this month from a year ago, according to preliminary estimates published Tuesday, after rising by 2.2% in July.
It comes after Germany reported on Monday its highest consumer prices since 2008, with a headline inflation rate of 3.4% in August. France also reported its highest inflation rate in nearly three years on Tuesday.
The ECB, due to meet Sept. 9, is expected to discuss the future of its asset purchase program as its governing council seems divided about when to start relaxing stimulus measures.
Speaking on Monday, France’s central bank governor, Francois Villeroy de Galhau, said the ECB should take into consideration the recent economic recovery when discussing what to do with its Covid stimulus package.
Meanwhile, Finish central bank governor, Olli Rehn, said in an interview with Politico last week that the central bank needs to be cautious about withdrawing stimulus.
Minutes from the ECB’s last meeting showed that some members believed the bank’s stance was underestimating the risk of higher inflation.
Tuesday’s higher inflation numbers will likely put pressure on the euro zone’s central bankers, especially when combined with comments from the Federal Reserve in the United States, which is considering lifting stimulus before the year-end.
The ECB’s mandate is to achieve 2% headline inflation over the medium term. Its own forecasts are currently projecting a spike in inflation this year to 1.9%, due to what they describe as temporary factors, before falling to 1.5% and 1.4% in 2022 and 2023, respectively.