Euro Zone Inflation Rises to 2.9% in July

European Central Bank (ECB) policymakers have another reason to consider raising interest rates in September, as inflation in the euro zone ticked up to 2.9% in July from 2.8% a month earlier.

The increase, driven by high oil prices following an Iran war-induced surge, is in line with expectations and adds to a strong case for another rate hike.

However, economists are cautious about the impact of further rate hikes on economic growth, as the euro zone economy expanded by 0.4% in the second quarter, twice as fast as expected.

The ECB has signaled that it will proceed with its baseline scenario, which includes a rate hike on September 10, despite concerns about high energy prices seeping into broader price and wage setting.