FRANKFURT, Germany — Annual inflation held steady in Europe in August as food prices raced ahead of falling fuel costs, but there was no clarity about whether the European Central Bank will pause its record series of interest rate hikes.
The consumer price index for the 20 countries that use the euro currency was unchanged at 5.3% from the July reading, supported by food, alcohol and tobacco prices that increased a painful 9.8% since last August, according to official figures from EU statistics agency Eurostat.
Another key inflation number – so-called core inflation that leaves out volatile fuel and food – also eased in August, falling to 5.3% from 5.5%, AP reported
That figure will be a key consideration for the ECB in deciding whether interest rates need to go higher or can remain unchanged while bank officials assess the impact of higher rates on growth.
Fuel prices fell 3.3% amid flat global oil prices and diminished summer demand for heating fuel.
European Central Bank President Christine Lagarde has said that the interest rate decision at the Sept. 14 policy meeting will depend on incoming data, a shift from a year-long series of meetings where rate increases had been announced ahead of time.
The ECB must juggle fighting inflation with higher rates against the impact of costlier credit for consumers and businesses.
Inflation has declined after hitting its peak in October at 10.6%, but the decrease has slowed in recent months and economists say the “last mile” toward returning inflation to the bank’s 2% target may be the most difficult.
One reason: unemployment remained at 6.4% in July, the lowest since the launch of the shared euro currency in 1999.
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