Brussels, Belgium – The annual rate of inflation in the eurozone remained unchanged in August as there was a smaller drop in energy prices, the EU’s official statistics agency said Thursday.
Consumer prices reached 5.3 percent in August, although there was also a slowdown in the rise of food and drinks costs.
A consensus forecast by analysts compiled by FactSet and Bloomberg had predicted a slight drop in consumer prices to 5.1 percent.
The figure is far higher than the European Central Bank’s two-percent target.
The ECB has hiked interest rates to their highest level since May 2001 to tame red-hot inflation, but its president Christine Lagarde suggested there could be a pause at the next rate-setting meeting in September.
“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 towards a hike or a hold at the meeting,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.
Inflation had been falling uninterrupted since May this year after a rise in April.
Core inflation, which strips out volatile energy, food, alcohol and tobacco prices, was down slightly to 5.3 percent in August from 5.5 percent in July.
Core inflation is the key signal for the Frankfurt-based ECB.
There was a smaller dip in energy prices, falling by 3.3 percent in August on the back of a drop of 6.1 percent in July.
Food and drink prices rose by 9.8 percent in August compared with 10.8 percent in July, according to Eurostat.
Among the 20 countries that use the euro, Belgium and Spain had the lowest inflation rate, at 2.4 percent in August, Eurostat said.
The annual inflation rate in Germany, Europe’s biggest economy, rose to 6.4 percent in August, down slightly from 6.5 percent in July, the agency said.
According to other Eurostat data published Thursday, the unemployment rate in the eurozone remained stable in July at 6.4 percent.