Eurozone inflation accelerated to 3.3 percent in August, marking the highest rate in three years, fueled largely by rising energy costs amid ongoing geopolitical tensions in the Middle East, according to official data released Tuesday. The increase surpasses the European Central Bank’s (ECB) target of two percent and reflects a notable jump from July’s 2.9 percent.

Eurostat, the European Union’s statistical office, highlighted that energy prices were the primary driver behind the inflation surge, increasing by 14.3 percent in August following a 10.3 percent rise in the previous month. The escalation in energy costs has been attributed to the conflict in the Middle East and the near-complete closure of the Strait of Hormuz—a critical passageway for global energy shipments—resulting in global supply constraints and higher prices.

Economic analysts expect inflation to remain elevated throughout the coming year, as continued pressure from gas and food prices contributes to upward momentum. Leo Barincou of Oxford Economics stated that higher gas and food prices will continue to exert influence on the inflation rate well beyond 2026.

In response to these inflationary pressures, the ECB is widely anticipated to implement an interest rate increase during its upcoming meeting on September 10, following a prior hike in June. ECB President Christine Lagarde has cautioned that the energy shock from the conflict “could intensify further,” potentially prolonging inflationary challenges.

Kamil Kovar of Moody’s Analytics noted that rising energy costs—including transport fuels, gas, and electricity—are bolstering support within the ECB for additional monetary tightening. While a rate increase next week appears certain, the prospect of further hikes later in the year, including a possible December move, remains uncertain.

Meanwhile, core inflation, which excludes volatile food and energy prices, remained relatively stable in August at 2.4 percent, slightly down from 2.5 percent in July. Food and drink prices showed little change, maintaining an inflation rate of 1.2 percent for the second consecutive month.

The last time eurozone inflation exceeded 3.3 percent was in September 2023, when it reached 4.3 percent, underscoring the current surge as the most significant since that period.