July preliminary data shows euro area inflation at 2.9% y/y, with core CPI climbing to 2.5%, increasing pressure on the ECB for further action.
Euro area inflation edged up to 2.9% year-over-year in July, matching expectations but surpassing June’s 2.8% print. Core inflation, excluding volatile food and energy prices, rose to 2.5% from 2.4% in June, signaling persistent underlying price pressures.
The breakdown revealed energy inflation surging to 10.0% from 8.5% in June, while services inflation held steady at 3.3%. Monthly data showed a sharp 2.4% increase in energy prices and a 1.1% rise in services, with food prices remaining flat.
Markets are pricing a 66% chance of a September rate hike, up slightly from earlier in the week. Traders expect 38 bps of additional tightening by year-end and 52 bps by mid-2027.