Eurozone inflation hit 2.9% in July as energy costs surged

Final data released Wednesday confirmed that Eurozone annual inflation accelerated to 2.9% in July 2026, matching flash estimates and rising from 2.8% in June, as a renewed surge in energy prices linked to resumed US-Iran hostilities kept price pressures well above the European Central Bank's 2% target.tradingview+1

Energy Prices Drive the Increase

The acceleration was largely driven by energy inflation, which jumped to 10.3% from 8.5% in June as geopolitical tensions between the United States and Iran flared again. Services inflation also edged higher to 3.3% from 3.2%, while non-energy industrial goods inflation rose to 0.9% from 0.7%. Food, alcohol, and tobacco inflation was the lone category to ease, falling to 1.2% from 1.5%.investinglive+1

Core inflation, which strips out volatile energy and food prices, ticked up to 2.5% from 2.4%, confirming that underlying price pressures are also strengthening.investinglive

Divergence Across Member States

Among the bloc's largest economies, inflation accelerated in Germany to 2.8% from 2.4%, France to 2.4% from 2.0%, Spain to 3.9% from 3.6%, and the Netherlands to 3.0% from 2.5%. Italy was the sole major economy to see a slight easing, with inflation dipping to 2.9% from 3.0%. Romania posted the EU's highest annual rate.aa+1

Sweden recorded the lowest inflation rate among EU member states in July.aa

ECB Under Pressure Ahead of September

The data keeps ECB policymakers on alert ahead of their September meeting. With core inflation holding above 2% and energy prices showing no signs of easing amid ongoing geopolitical risk, analysts expect the central bank to raise rates again next month. ECB policymaker Olli Rehn has said there are "no clear signs of second-round effects just yet," but the persistent upward drift in services prices suggests the risk remains.investinglive