European statistics office Eurostat confirmed on Wednesday its estimate of eurozone year-on-year inflation in July, at 2.9%, one-tenth of a percentage point higher than in June. Across the European Union as a whole, inflation rose one-tenth to 3%.
Energy prices climbed above 10% again in July, reaching an increase of 10.3% compared to the previous year, according to Eurostat data. The energy rise is the main driver of overall inflation in the region. Among the eurozone's largest economies, Spain recorded the highest inflationary pressure at 3.9%, followed by Italy at 2.9%, Germany at 2.8% and France at 2.4%.
Volatility in energy markets stems from geopolitical tensions in the Middle East. Experts point out that the situation in the Strait of Hormuz, a crucial route for fossil fuel trade, remains one of the main points of friction between Washington and Tehran.
If the impact of energy were excluded, eurozone inflation in July would have stood at 2.2%, unchanged from June. However, core inflation, which also excludes fresh food and is the indicator that governments and central banks focus on, rose to 2.5% in July from 2.4% the previous month.
Philip Lane, chief economist of the European Central Bank, forecast on Tuesday that eurozone inflation will hover around 3% for the rest of 2026, a level he described as "well above the 2% target" that central banks are pursuing. Lane also warned that weather phenomena such as El Niño "are expected to exert greater upward pressure" on prices, particularly in 2027.
