Eurozone Inflation Exceeds Expectations in July, Boosting Likelihood of September ECB Rate Hike

Eurozone consumer prices rose by 2.9% year-over-year in July, according to Eurostat's flash estimate, surpassing June's 2.8% and consensus forecasts. Energy prices were a primary driver of the increase, with core inflation also rising to 2.5% from 2.4%. These figures, which remain well above the European Central Bank's (ECB) 2% target, have led futures markets to price in a higher probability of a 0.25 percentage point ECB rate hike in September, with further increases anticipated before the end of 2026.