The underlying inflation rate, which excludes the volatile prices of energy, food, alcohol, and tobacco, also rose by a tenth, to 2.5%.
Reported by Consejeros Editorial Team
Eurozone inflation has halted its downward trend and, in July, it rose by a tenth, bringing the Consumer Price Index (CPI) to 2.9%, according to figures published this Friday by Eurostat, the statistical office of the European Union (EU).
The July surge is mainly due to energy prices, which are skyrocketing again in anticipation of the end of the war in the Middle East, which has significantly raised the cost of oil in recent months.
“When analysing the main components of inflation in the eurozone, it is expected that energy will record the highest annual rate in July (10%, compared to 8.5% in June), followed by services (3.3%, compared to 3.2% in June), food, alcohol, and tobacco (1.2%, compared to 1.5% in June), and non-energy industrial goods (0.9%, compared to 0.7% in June),” details the organization that disseminates the data.
By country, the lowest annual rates were in Estonia (2%), Malta (2.1%), and France (2.4%). On the contrary, the highest annual rates were in Lithuania (5.6%) and Bulgaria (4.1%).
As for the core inflation rate, that is, the one that excludes the volatile prices of energy, food, alcohol, and tobacco, it rose by a tenth, reaching 2.5%.
Following this data, Ulrike Kastens, an economist at DWS, noted, “We believe that inflationary pressures are currently mainly due to energy prices, while indirect effects have remained limited so far.” However, given the volatility of energy markets, the ECB must remain vigilant. Therefore, we still expect the ECB to raise its deposit rate to 2.5% in September.
