Eurozone headline CPI at 3.3% y/y in August, sharply up from 2.9% in July, in line with consensus. Monthly change +0.4%.

Unlike the headline, core (ex energy, food, alcohol, tobacco) held steady at 2.4%, slightly below July's 2.5%. Ex energy only, core sits at 2.2%, unchanged from July. No upside surprise on the underlying measure, confirming exactly the scenario flagged the day before, the ECB has no reason to shift its trajectory off this release.

Energy at 14.3% y/y versus 10.3% in July, a 4-point jump that accounts for most of the headline acceleration. Consistent with the already identified geopolitical backdrop (Iran tensions, oil pressure). Services, by contrast, eased to 3.0% from 3.3% in July, a sign underlying inflationary pressure isn't intensifying.

Spain (4.5%) and Cyprus (5.2%) pull the average higher with sharp accelerations. France stays below average at 2.7%, Germany at 2.9%. Lithuania continues to stand out at 5.8%, the highest in the bloc.

Limited reaction expected, consistent with yesterday's analysis. The sharp headline jump could trigger an initial move from algos reacting to the raw number, but core stability, the actual measure the ECB watches, doesn't justify a shift in policy trajectory. EUR/USD: no structural catalyst here, the market should quickly refocus on the energy driver rather than a broad-based domestic inflation signal.

Don't mistake the headline acceleration for an ECB tightening signal, the driver is external (energy, geopolitics) and core remains stable to slightly softer. This print confirms yesterday's narrative, the ECB stays in wait-and-see mode.

Sources