Eurozone annual inflation accelerated to 3.3% in August 2026 from 2.9% in July, in line with market expectations, according to preliminary estimates. The rate reached its highest level since September 2023 and remained well above the ECB’s 2% target, driven largely by a surge in energy prices amid continued fighting in the Middle East. The data strengthened expectations for an ECB rate hike as soon as this month, with markets fully pricing a 25-basis-point increase to 2.5%. Energy inflation jumped to 14.3%, its highest since January 2023, while unprocessed food and non-energy industrial goods inflation also accelerated. Services inflation, however, eased to a four-month low of 3.0%, while core inflation, excluding energy and food, edged down to 2.4%, below forecasts of 2.5%. Among the euro area’s largest economies, inflation accelerated in Germany to 2.9% from 2.8%, France to 2.7% from 2.4%, Spain to 4.5% from 3.9%, and Italy to 3.2% from 2.9%.