Eurozone headline inflation rose to 3.3% in August 2026 from 2.9% in July, matching forecasts and reaching its highest level since September 2023, as energy costs surged amid the Middle East war and disruption around the Strait of Hormuz. Energy inflation jumped to 14.3% from 10.3%, while core inflation eased unexpectedly to 2.4% from 2.5% and services inflation slowed to 3.0% from 3.3%. ECB economists Kristina Barauskaitė Griškevičienė and Claus Brand said adverse energy-supply factors accounted for around 90% of the increase in energy inflation between January and May 2026, with monetary and fiscal policies exerting only slight downward pressure. ECB Governing Council member Nagel called the core slowdown a positive signal and said second-round effects were not yet visible. Markets have fully priced a 25-basis-point deposit-rate increase to 2.50% at the ECB’s September 10 meeting, following the June increase from 2% to 2.25%. Officials have warned that persistent energy-driven risks could require further tightening, although most economists expect a pause after September because underlying pressures, labor-market conditions and growth remain subdued.