Key facts
- Eurozone inflation rose to 2.9% in July, up from 2.8% in June.
- Core inflation increased to 2.5% from 2.4%.
- Energy prices jumped 10% year-on-year, and services prices rose 3.3%.
- Lithuania had the highest inflation rate at 5.6%, while Estonia had the lowest at 2.0%.
- The Netherlands saw the largest monthly price increase, while Greece experienced the largest monthly decrease.
Eurozone inflation accelerated to 2.9% in July, reversing a slight easing seen in June, as higher energy costs, influenced by renewed Middle East conflict, pushed prices up. The annual inflation rate surpassed June's 2.8% and met economists' expectations. Core inflation, which excludes volatile food and energy prices, also saw a marginal increase to 2.5% from 2.4%.
Energy prices recorded the largest year-on-year jump at 10%, while services prices increased by 3.3%. Despite the headline rise, inflation trends varied significantly across the 20-member bloc. Lithuania continued to experience the highest inflation rate at 5.6%, followed by Bulgaria (4.1%) and Cyprus (4.0%). Conversely, Estonia reported the lowest inflation at 2.0%, with Malta (2.1%) and France (2.4%) also seeing relatively low rates.
On a monthly basis, the Netherlands experienced the sharpest price increase, with consumer prices rising 1.5% from June. Germany saw a 0.9% monthly increase, and France 0.6%. In contrast, Greece saw the steepest monthly price fall of 1.4%, followed by Italy (-1.0%) and Latvia (-0.7%).
Economists noted that headline inflation is expected to remain sticky, potentially staying above 2.5% for the eurozone. The European Central Bank is anticipated to implement another 25-basis-point rate hike before pausing its monetary tightening cycle. Concerns remain about the impact of elevated oil and natural gas prices on the energy-importing eurozone economy.
Markets reacted positively to the data and broader economic sentiment. European equities extended their rallies, with technology shares leading the advance. Germany's DAX 40 and the Euro Stoxx 50 indices reached fresh record highs. The euro also strengthened modestly against the US dollar.