Euro area inflation climbed to 2.9% in July, reinforcing expectations for another ECB rate hike next month.
Euro area inflation accelerated to 2.9% year-over-year in July, up from June’s reading, driven by persistent price pressures in services and core sectors. Core inflation held at 2.5%, while services inflation rose to 3.3%, signaling limited progress in curbing underlying price growth.
The data aligns with expectations that the European Central Bank will deliver another rate hike in September, following its July increase. Markets had priced in a pause, but recent inflation trends suggest policymakers may opt for further tightening to anchor inflation expectations.
Strategists note the lack of meaningful second-round effects remains a key consideration, though the ECB’s base case still favors a September move.