Eurozone inflation jumps

City A.M. Reporter
Eurozone inflation jumped more than expected in August, data showed today, likely reducing chances that the European Central Bank (ECB) will cut interest rates next Thursday.

Consumer prices in the 17 countries sharing the euro rose 2.6 per cent year on year, just above forecasts and accelerating from 2.4 per cent in July, the European Union's statistics office estimated.

"This is the first time the euro area inflation rate has accelerated since September last year, and we think that it should rise further in September," Francois Cabau, economist at Barclays Capital, wrote in a research note.

BarCap believed rising energy prices were the main factor, he said.

Inflation has fallen from three per cent in November 2011 to stabilise at 2.4 per cent in May, June and July as the Eurozone economy slowed because of the debt crisis.

The ECB, which targets inflation below but close to two per cent, had expected the rate to fall below two per cent by the end of the year.