Higher energy costs drove euro zone inflation back above 3 per cent in August, paving the way for another European Central Bank (ECB) rate hike next week.

Price growth across the bloc accelerated to 3.3 per cent last month, up from 2.9 per cent in July, driven almost entirely by higher oil and gas prices, data from Eurostat indicated.

The latest figures are consistent with the ECB’s own expectations and suggest that a widely anticipated hike in the deposit rate to 2.5 per cent next week will be a relatively easy decision. It would be the bank’s second move this year after a ​hike in June.

Markets have already priced in the move with the focus now firmly on what happens down the ‌line amid a complicated geopolitical backdrop with the US and Iran still on a war footing.

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Policymakers will take heart from the fact that underlying price pressures remained modest, suggesting the second-round effects of higher energy prices are not as widespread as many feared.

The Eurostat figures indicated core inflation – which ⁠exclude volatile food and fuel prices – eased to 2.4 per cent last month from 2.5 per cent as growth in services prices, the single biggest ‌component ‌of ​the consumer price basket, slowed to 3 per cent from 3.3 per cent.

Financial markets see two more rate hikes in the next year on the premise that higher energy prices ‌will eventually start seeping into broader ⁠price setting, especially since the war in Iran is showing no signs of winding down, keeping inflation high.

Natural gas prices are also rising while the broader economy has also proven resilient to the economic stress of wars, tariffs, and ‌higher rates, so the ECB may need to do more to stem price pressures, some economists argue.

In addition, global peers, including the US Federal Reserve, may also be ​forced into rate hikes, boosting market bets for a global rate-hike cycle.

Still, even if the ​ECB is forced into further hikes, there appears to be little urgency in follow-up moves, so policymakers may skip the October meeting and focus on the next round of economic projections in December.

– Additional reporting: Reuters