Eurozone Inflation Hits 2.9% as Energy Costs Soar

The inflation rate in the eurozone has risen to 2.9% year-on-year in July 2026, according to data released by Eurostat. This marks a 0.1 percentage point increase from June's 2.8% and is significantly higher than the 2% recorded a year ago.

The European Central Bank (ECB) will likely take this into consideration when making its decision on interest rates in September. The ECB has raised the deposit facility rate to respond to inflation shocks, but with core inflation at 2.5%, services growing above 3%, and rising energy costs, a rate cut seems unlikely.

Energy prices were the main contributor to the rise in inflation, increasing by 10.3% year-on-year, while services continued to drive inflation due to their weight in consumption. Food prices, however, moderated their inflation from 1.5% to 1.2%, with unprocessed food decreasing from 3.1% to 2.4%

Spain's harmonized index rose to 3.9% in July, exceeding the eurozone average by one point, while Germany and France saw increases from 2.4% to 2.8% and 2% to 2.4%, respectively.