Eurozone inflation rose to 2.9% year-on-year in July, confirming the preliminary estimate and up from 2.8% in June. Core inflation firmed to 2.5% from 2.4%, with energy prices and services doing most of the pushing.
Eurostat confirmed on Wednesday that headline consumer prices in the eurozone rose 2.9% year-on-year in July, up from 2.8% in June. Core inflation, which strips out food and energy, also climbed to 2.5% from 2.4%, showing the acceleration was not driven by energy alone.
Energy and services push prices higher
Energy provided the sharpest upward pressure. Annual energy inflation jumped to 10.3% from 8.5%, lifting its contribution to the headline rate from 0.77 to 0.94 percentage point. Services inflation, the largest single contributor, edged up to 3.3% from 3.2% and added 1.55 percentage points to the headline figure.
Food, alcohol and tobacco inflation offered some relief, slowing to 1.2% from 1.5%.
ECB faces a harder call in September
The European Central Bank left interest rates unchanged in July, but according to the ECB: "uncertainty remains high" around the fallout from the Iran war and its impact on energy prices. Investors are now penciling in more rate hikes in the coming months. Resilient growth is feeding that view: the eurozone economy expanded 0.4% in the second quarter, faster than in the first three months of the year.
The ECB is likely to hike again in September to guard against the risk of second-round effects, should they materialize.
Sources: Investinglive, ActionForex, Investing.com
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