Inflation in the eurozone rose to its highest level in a decade in August, testing policymakers' view that the rise in inflationary pressures after the crisis was temporary.
Euro-zone consumer prices (CPI) rose 3% year-on-year, exceeding the expectations of all 37 economists surveyed by Bloomberg. Core inflation, which excludes volatile items such as energy and food, rose 1.6 per cent from a year earlier, the highest since 2012.
While global supply constraints are pushing up costs, the surge in prices in the eurozone has also been driven by one-off factors, such as lower figures for the same period last year. The ECB believes that the rise in inflation is temporary and that monetary policy in the euro zone is much looser than the Fed, which is expected to start shrinking soon.
For now, however, price rises in the euro zone are likely to continue to accelerate. Imported inflation in Germany, the region's largest economy, is currently 15 per cent. Eurozone retailers plan to raise prices in the next three months, but consumers have also adjusted their strategies, saying they are unlikely to make major purchases in the coming year.