ECB rate decision due September 10 as services inflation eases
French annual inflation rose to 2.7% in August from 2.4% in July, according to European Union-harmonized data released Friday by the country’s statistics agency Insee.
The increase reflects continued upward pressure on energy prices as the US-Israel war with Iran drags on. A tentative peace deal in June had brought energy prices lower and helped French inflation return to target after peaking at 2.8% in May. A resumption of hostilities in the Middle East has since pushed inflation higher again in recent months.
The data lands ahead of the European Central Bank’s September 10 meeting, at which the central bank is widely expected to raise interest rates for the second time since the conflict with Iran began, according to the Wall Street Journal. The ECB is seeking to prevent higher energy costs from feeding through into other areas of the economy.
Within the August release, French services inflation eased, a separate data point that points to limited second-round inflationary effects in a key sector of the economy.