According to provisional data released by Eurostat, the statistical office of the European Union, on September 2 (local time), consumer prices in the eurozone (the 20 countries using the euro) rose by 2.1% year-on-year last month.
The inflation rate in the eurozone had dropped to 1.9% in May, but rebounded slightly to 2.0% in both June and July.
Last month's consumer price increase exceeded expert forecasts by 0.1 percentage point. The core inflation rate, which excludes volatile items such as energy, food, alcohol, and tobacco, stood at 2.3%, unchanged from July.
Energy prices, which have contributed to price stability since the second half of last year, saw their rate of decline shrink from 3.6% in May this year to 1.9% last month.
In its economic outlook released in June, the European Central Bank (ECB) projected that this year's consumer price inflation would settle at its target of 2.0%, and fall to 1.6% in 2026.
ECB officials are leaning toward keeping policy rates unchanged at the upcoming monetary policy meeting on September 11. Isabel Schnabel, an executive board member classified as a policy hawk, stated, "I still believe that tariffs overall cause inflation," adding, "We are already in a somewhat accommodative policy stance, so there is no reason to cut rates further in the current situation."
In contrast, Olli Rehn, Governor of the Bank of Finland, pointed out in a recent local media interview that "there are more downside risks to inflation," citing the strength of the euro and falling energy prices. Martin Kocher, Governor of the Austrian National Bank, commented, "There are differing opinions about the current rate level," and agreed with some committee members who suggested caution in the coming weeks.
The ECB cut its policy rate by a total of 2.00 percentage points over eight rounds from June last year, and kept rates unchanged last July. The market expects the ECB to hold rates steady at meetings this month and next, with a possible rate cut in December.
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