Inflation in Greece eased slightly to 3.4% in August from 3.5% in July, according to the Eurostat’s Spain Harmonized Index of Consumer Prices, while in the euro area it remained stable at 5 .3%.
Inflation in Greece fell slightly last month. In particular, in August, prices for food, alcohol and tobacco products showed an increase of 9.2% year on year compared to July (10%). According to Eurostat, inflation in the Eurozone remained at 5.3% in August. Data released this week already suggests that inflation has picked up again in Spain and France.
Isabelle Schnabel, Member of the Executive Board of the European Central Bank (ECB), noted that eurozone economic outlook worse than expected back in June. She also noted that core inflation continues to rise steadily. Emphasizing the difficulties posed by the current economic situation, the official refrained from commenting and making any forecasts for September.
However, markets are taking it for granted that the ECB will take no action in September. The cycle of rate hikes is expected to end later this year with a final 25 basis point hike to 4%.
Analysts’ concern boils down to the fact that Europe is now facing stagflation – a combination of weak economic activity and high inflation.