Eurozone Inflation Rises Amid Ongoing Middle East Conflict

Eurozone inflation rose slightly in July due to higher energy prices caused by the ongoing conflict in the Middle East. The European Central Bank's (ECB) key deposit rate remains unchanged, but the door has been opened for a potential increase in September.

According to data released by Eurostat, consumer price rises accelerated to 2.9% in July from 2.8% in June, exceeding the ECB's 2% target and aligning with analysts' predictions for Bloomberg. The conflict between the US and Iran has led to increased energy prices, which rose by 10% in July compared to a 8.5% increase in June.

Core inflation, which excludes volatile energy and food prices, also accelerated slightly to 2.5% in July after slowing down to 2.4% last month. Food and drinks inflation slowed down to 1.2% this month from 1.5% in June. The European Central Bank's chief Christine Lagarde warned that the energy shock from the conflict could intensify further.