Eurozone inflation rises to 2.9 per cent in July

Brussels (ANTARA) - Annual inflation in the eurozone is estimated to rise slightly to 2.9 per cent in July from 2.8 per cent in June, according to flash estimates released by Eurostat on Friday.

The increase was primarily driven by a resurgence in energy price pressures. Energy prices are expected to rise by 10.0 per cent year-on-year in July, up from 8.5 per cent in June, according to Eurostat, the statistical office of the European Union (EU). Service sector inflation is also expected to rise to 3.3 per cent from 3.2 per cent in the previous month.

Prices for food, alcoholic beverages, and tobacco are expected to rise by 1.2 per cent year-on-year, down from 1.5 per cent in June, while non-energy industrial goods are expected to record an annual inflation rate of 0.9 per cent, up from 0.7 per cent. Core inflation, which excludes energy, food, alcoholic beverages, and tobacco, is estimated at 2.5 per cent in July, up from 2.4 per cent in June.

According to Eurostat data, inflation increased in the three largest eurozone economies in July. The inflation rate in Germany rose to 2.8 per cent from 2.4 per cent in June, France rose to 2.4 per cent from 2.0 per cent, and Spain rose to 3.8 per cent from 3.6 per cent. Meanwhile, the inflation rate in Italy fell slightly to 2.9 per cent from 3.0 per cent.

Bert Colijn, ING’s chief economist for the Netherlands, stated on Friday that fuel prices rose sharply in July, but the impact on the month’s inflation figures was relatively limited as the month began while the Memorandum of Understanding (MoU) between the United States and Iran was still in effect. He warned that inflation could increase significantly in August if oil prices remain around current levels, adding that the rise in core inflation reflects a slight upward trend in both goods and services inflation.

The data was released after the European Central Bank (ECB) decided last week to keep its three key interest rates unchanged. The ECB noted that the outlook for energy prices remains highly volatile and that the full inflationary impact of energy price shocks has not yet fully materialised.