Eurozone inflation forecast to hit 3.3% in August

Consumer prices across the eurozone are expected to have risen 3.3% year-on-year in August, according to forecasts from Goldman Sachs The Goldman Sachs Group, Inc. ↘ 0.36% and DekaBank, as energy costs continue to surge well above the European Central Bank's 2% target. The official flash estimate from Eurostat Euronext N.V. is due on September 1, but early national data and analyst projections point to a marked acceleration from July's 2.9% reading.global.morningstar+2

Energy Prices Lead the Surge

The primary driver remains energy, which Goldman Sachs expects rose 14.4% year-on-year in August, up sharply from 10.0% in July. The spike reflects continued fallout from the war in Iran, which has disrupted oil supply routes and kept Brent crude elevated. European natural gas prices also remain under pressure, with EU gas storage tracking toward an all-time low of 69% by November 1, leaving the continent more vulnerable to winter supply shocks.europa+1

Services inflation, meanwhile, is forecast to hold steady at 3.3%, with economists attributing its persistence to delayed energy cost pass-through rather than a wage-price spiral. "There are no signs of an acceleration in wage growth," said Joachim Schallmayer, head of capital markets and strategy at DekaBank, adding that "energy costs and delayed price adjustments are likely also embedded in services inflation".global.morningstar

Uneven Pressure Across Member States

National data released Friday underscored widening divergences. Spain's harmonized inflation jumped to 4.5% in August from 3.9% in July, driven by fuels and lubricants. Belgium's CPI climbed to 3.97%, well above the eurozone average, partly due to its automatic wage indexation system. France posted a more moderate 2.7% harmonized rate, though energy there also accelerated sharply.cryptorank+2

ECB Rate Hike All But Certain

The inflation backdrop has cemented expectations for a rate increase at the ECB's September 10 meeting. Reuters reported that policymakers are ready to raise the deposit rate to 2.50% from 2.25%, though they have little appetite to signal further moves beyond that. Swap markets price a 96.6% probability of the hike.reuters+1

Goldman Sachs expects headline inflation to peak around 3.4% in the fourth quarter before base effects pull it back toward 2% by mid-2027. ECB executive board member Isabel Schnabel reinforced the hawkish stance, telling Bloomberg last week that "further tightening will be necessary" to return inflation to target.global.morningstar