ECB to pause rate hikes but signal that more may be needed

Policymakers nevertheless argue that even if second-round effects are smaller and delayed, they are still coming and the ECB needs to be ready to act.

Scorching summer weather in much of Europe this month is also a potential risk. The heat may have damaged crops and could push up food prices, while low water levels on key rivers could create shipping bottlenecks.

"While food inflation has generally trended lower in recent months, reflecting softer prices for commodities such as sugar, cocoa and coffee, an unusually warm summer in Europe, combined with the effects of El Niño, could renew upward pressure on food prices," Barclays said in a note.