Eurozone Inflation Surges to 2.9% as Energy Costs Soar

Consumer price growth in the eurozone accelerated for the second consecutive month as energy costs rose due to the renewed conflict in the Middle East. According to Eurostat's flash estimate, annual inflation across the bloc increased to 2.9% in July from 2.8% in June.

The core inflation rate, which strips out volatile food and energy prices, also ticked higher to 2.5%, up from 2.4%. Energy recorded the highest annual jump with a 10% year-on-year increase, followed by services at 3.3%.

However, inflation trends varied across the eurozone, with Lithuania experiencing the highest rate at 5.6%, followed closely by Bulgaria (4.1%), Cyprus (4.0%), Spain (3.8%), and Croatia (3.6%).

Estonia reported the lowest annual inflation rate at 2.0%, while Germany saw its inflation accelerate to 2.8%. The European Central Bank is expected to deliver another 25-basis-point rate hike before pausing, according to Pantheon Economics' economist Claus Vistesen.