Contrary to what most observers expected and consumers hoped, the inflation rate in the euro area did not fall in August, but remained at 5.3 percent. The core rate (i.e., excluding energy and food) also remains stubbornly high, dropping only to 5.3 percent from 5.5 percent the previous month.

Energy prices fell a little more than 3 percent from a year ago, but that was largely due to the base effect. Overall, energy is still around 50 percent more expensive than before the crisis.

Food increased in price by just under 10 percent, making it about one-fifth more expensive than before the invasion.

Of real concern to the ECB, however, is that services increased in price by around 5 ½ percent. A key driver here is wages. The question for the ECB is whether the economic slowdown we are currently experiencing is already enough to keep wages in check in the future. Today's data indicate that an all-clear is far from appropriate and make an interest rate hike at the upcoming ECB meeting a very likely option.