Annual consumer inflation in the eurozone rose to 2.9% in July, up from 2.8% in June, according to a flash estimate released by Eurostat. The 2.9% rate for July was in line with expectations from economists. {
2.9% %
Annual eurozone consumer inflation in July
Energy prices in the eurozone recorded a 10% annual increase in July, following an 8.5% rise in June. It has been reported that renewed conflict in the Middle East drove these higher energy costs. On a monthly basis, consumer prices in the eurozone rose an estimated 0.2% in July. {
Core inflation, which excludes energy, food, alcohol, and tobacco, increased to 2.5% from 2.4%. Services inflation rose to 3.3% in July from 3.2% in June, while inflation for non-energy industrial goods increased to 0.9% from 0.7%. Inflation for food, alcohol, and tobacco slowed to a 1.2% year-on-year increase in July, down from 1.5% in June. {
Regional inflation trends
Inflation rates varied across the eurozone in July. Lithuania recorded the highest rate at 5.6%, followed by Bulgaria at 4.1%, Cyprus at 4.0%, Spain at 3.8%, and Croatia at 3.6%. In Germany, inflation accelerated to 2.8%, while Italy's rate matched the eurozone average at 2.9%. Austria and Finland both reported 2.6%, Latvia reported 2.5%, and France reported 2.4%. Malta recorded 2.1%, and Estonia reported the lowest annual inflation rate at 2.0%. {
Monthly price movements showed significant divergence. The Netherlands recorded the sharpest monthly increase, with prices rising 1.5% from June, while Greece recorded the sharpest monthly fall at -1.4%. {
Market and Central Bank outlook
Following the inflation figures, the euro strengthened modestly against the US dollar to 1.1520.
The European Central Bank (ECB) aims to reach a long-term inflation target of 2% in the eurozone. Pantheon Economics expects the ECB to deliver another 25-basis-point rate hike before pausing. Claus Vistesen, an economist at Pantheon Economics, stated, 'We think headline inflation will remain sticky at just above 2.5% for the Eurozone.' {
Matthew Ryan, head of market strategy at Ebury, stated, 'The ongoing conflict and a spike in energy costs remain key risks to growth, given that the Eurozone is a net importer of energy.' Additionally, eurozone GDP unexpectedly accelerated in the second quarter. {
Updates
Specific July consumer price movements show monthly increases in the Netherlands (0.9% from 1.5% in June), Germany (0.9%), France (0.6%), Croatia (0.6%), Malta (0.6%), and Estonia (0.5%), while Bulgaria rose by 0.4%. Conversely, monthly price declines were recorded in Italy (1.0%), Latvia (0.7%), Belgium (0.6%), Luxembourg (0.6%), Austria (0.4%), Portugal (0.3%), and Slovenia (0.3%). Market data also shows gains in the CAC 40 and FTSE MIB, alongside significant single-day jumps for Infineon Technologies, STMicroelectronics, Siemens Energy, and Microsoft.
Following the headline inflation report, Euro Stoxx 50 reached an all-time high, while the euro strengthened to 1.1520 against the US dollar. Individual country data shows monthly consumer price increases in Germany (0.9%), France (0.6%), and the Netherlands (0.9% from 1.5% in June), alongside price falls in Italy (1.0%), Latvia (0.7%), and Belgium (0.6%). Additionally, market analysts suggest the ECB is likely to act again in September due to persistent energy costs.
Eurozone stock markets saw significant movement as the Euro Stoxx 50 reached an all-time high, while the euro strengthened to 1.1520 against the US dollar following the inflation data. Regional consumer price trends varied, with monthly increases of 0.9% in Germany and the Netherlands, whereas Italy, Latvia, Belgium, Luxembourg, Austria, Portugal, and Slovenia all recorded monthly price falls. Additionally, investor sentiment was bolstered by rising shares in Infineon Technologies, STMicroelectronics, and Siemens Energy, alongside reports that the ECB is likely to act again in September due to persistent energy costs.
Following the inflation data, the Euro Stoxx 50 reached an all-time high and the euro strengthened modestly to 1.1520 against the US dollar. While individual member states showed mixed consumer price trends, such as a 0.9% monthly increase in Germany and a 1.0% price fall in Italy, market whispers suggest the ECB may not be able to fully relax if inflation remains sticky. Additionally, the ECB is likely to act again in September due to sustained high energy costs.
Regional consumer price movements show varied results, with monthly increases recorded in the Netherlands (0.9% following a 1.5% rise in June), Germany (0.9%), France (0.6%), Croatia (0.6%), Malta (0.6%), Estonia (0.5%), and Bulgaria (0.4%), while price falls were reported in Italy (1.0%), Latvia (0.7%), Belgium (0.6%), Luxembourg (0.6%), Austria (0.4%), Portugal (0.3%), and Slovenia (0.3%). Market reactions include the Euro Stoxx 50 reaching an all-time high and the euro strengthening modestly to 1.1520 against the US dollar. Additionally, the ECB is likely to take further action in September due to persistent energy costs.
