Eurozone Inflation Hits 2.9%, Strengthening Case for ECB Rate Hike

The Eurozone inflation rate rose to 2.9% in July, exceeding expectations and bolstering the case for another interest rate hike by the European Central Bank (ECB) in September.

According to a flash estimate from the ECB, the renewed rise in fuel and natural gas prices drove the increase, which marked the fifth consecutive month that price growth has exceeded the ECB's 2% medium-term target.

The inflation rate rose across France, Germany, and Spain, with every country except Estonia exceeding the ECB's target of 2%. Core inflation, which excludes volatile food and energy prices, unexpectedly rose from 2.4% to 2.5%.

Bert Colijn, chief economist at ING, warned that there is 'plenty of scope' for inflation to rise further in the coming months, particularly if oil prices remain high.