Eurozone inflation accelerated to 2.9% year-over-year in July from 2.8% in June, driven by a 10.3% jump in energy prices amid renewed geopolitical tensions, the EU statistics office confirmed on Wednesday.
The uptick follows a temporary easing in June, when the rate fell to 2.8% after peaking at 3.2% in May. Services inflation remained elevated at 3.3%, while food, alcohol and tobacco prices rose 1.2% year-over-year. Germany’s harmonized inflation rate stood at 2.8%, slightly below the euro area average, after declining to 2.4% in June due to the expiration of a temporary fuel tax cut on June 30.
The European Central Bank paused its tightening cycle in July after its first rate hike in three years in June, but officials remain concerned that renewed energy price shocks could destabilize inflation expectations. ECB policymaker Olli Rehn, governor of Finland’s central bank, said on Wednesday that wage growth has remained moderate and there are no clear signs of second-round effects where rising prices trigger further wage increases.
«Decisive will be keeping inflation expectations anchored,» Rehn said in prepared remarks. The ECB’s next policy meeting is scheduled for September 10, with markets expecting further guidance on the inflation outlook and potential policy adjustments. The central bank has repeatedly emphasized its 2.0% inflation target, which remains out of reach amid persistent energy-driven price pressures.
