Euro Area CPI inflation at 10-year high

Inflation continues to accelerate in the eurozone. The latest estimates showed an acceleration to 3% y/y in August, well above the expected 2.7% and in line with the peak levels of a decade ago. In both cases, the price driver for inflation was soaring commodity prices because of massive liquidity injections in the world’s largest economies.

Hawks at the ECB have stepped up, Robert Holtzmann, Oesterreichische Nationalbank Governor. He said that the European Central Bank is “in position to think about reducing pandemic aid” and “needs to have inflation risks on its mind”.

The high CPI growth rate and continued inflationary pressures in producer and import prices make inflation a severe threat. However, what matters for the markets is not the rate of price increases but how the central bank treats them. Concerns over inflation could strengthen support for the euro.

The FxPro Analyst Team