German inflation rose slightly in August, further strengthening the reasons for the ECB's interest rate hike in September. Consumer prices rose 2.9% year on year in August, surpassing 2.8% in July, the highest level since April, but lower than the median forecast of 3.1%. Once again, energy is a major driver. The Middle East peace agreement is still slow to be reached, and the rise in service and food prices has slowed. Before the German data was released, France and Spain already showed signs that oil and gas prices were driving up inflation throughout the region, increasing pressure on the ECB to take action. ECB officials have raised interest rates once before and are expected to raise interest rates again on September 10. Traders are also betting that monetary policy will be further tightened next year. ECB Governing Council member Primoz Dolenc said in an interview last week that the reason for the September rate hike “already exists.” According to previous surveys, the Eurozone inflation rate is expected to rise to 3.3% in August.

German inflation rose slightly in August, further strengthening the reasons for the ECB's interest rate hike in September. Consumer prices rose 2.9% year on year in August, surpassing 2.8% in July, the highest level since April, but lower than the median forecast of 3.1%. Once again, energy is a major driver. The Middle East peace agreement is still slow to be reached, and the rise in service and food prices has slowed. Before the German data was released, France and Spain already showed signs that oil and gas prices were driving up inflation throughout the region, increasing pressure on the ECB to take action. ECB officials have raised interest rates once before and are expected to raise interest rates again on September 10. Traders are also betting that monetary policy will be further tightened next year. ECB Governing Council member Primoz Dolenc said in an interview last week that the reason for the September rate hike “already exists.” According to previous surveys, the Eurozone inflation rate is expected to rise to 3.3% in August.