Image Credits: Eurozone inflation rises to 2.9% in July as energy costs push prices higher. AI-generated illustration created by Open Chronicle using ChatGPT (OpenAI). July 2026. This image is illustrative and does not depict a real-world scene.
By Open Chronicle Business Desk with Agencies
Annual inflation across the eurozone edged higher in July 2026, reaching 2.9%, as rising energy prices continued to put upward pressure on consumer costs, according to a flash estimate published by Eurostat.
The increase follows a reading of 2.8% in June, highlighting the continuing impact of energy market volatility on the euro area’s inflation outlook despite recent efforts by the European Central Bank (ECB) to bring price growth closer to its long-term target.
Energy drives inflation higher
Energy prices remained the biggest contributor to inflation during July.
According to Eurostat, energy costs are estimated to have increased 10.0% year-on-year, accelerating from 8.5% in June and reversing expectations that inflationary pressures would continue to ease.
Services inflation also edged higher, rising to 3.3% from 3.2% the previous month, suggesting that domestic price pressures remain resilient across the eurozone economy.
Food, alcohol and tobacco prices, however, showed signs of moderation, increasing 1.2% annually, compared with 1.5% in June.
Meanwhile, prices for non-energy industrial goods rose 0.9%, up slightly from 0.7% a month earlier.
Core inflation also increases
Core inflation, which excludes the more volatile categories of energy, food, alcohol and tobacco, also moved higher.
The annual core inflation rate is estimated at 2.5%, compared with 2.4% in June, indicating that underlying inflationary pressures remain present despite slower overall economic growth in parts of the eurozone.
Largest economies show mixed picture
Among the euro area’s four largest economies, inflation increased in three during July.
Germany recorded an annual inflation rate of 2.8%, up from 2.4% in June.
France saw inflation rise to 2.4%, compared with 2.0% a month earlier.
Spain continued to post one of the highest rates among the major economies, with inflation climbing to 3.8% from 3.6%.
Italy was the only one of the four to record a slight decline, with inflation easing to 2.9% from 3.0%.
Across the eurozone, Lithuania recorded the highest estimated annual inflation rate at 5.6%, while Estonia posted the lowest at 2.0% among countries with available data.
Energy outlook remains uncertain
Economists warned that inflationary pressures could strengthen further in the coming months if energy prices remain elevated.
ING Chief Economist for the Netherlands, Bert Colijn, noted that fuel prices rose sharply during July but their impact on headline inflation was partly moderated because the month began while a temporary U.S.–Iran memorandum of understanding was still influencing global energy markets.
He cautioned that inflation could increase more noticeably in August should oil prices remain near current levels, adding that both goods and services inflation were showing signs of gradually strengthening.
ECB maintains interest rates
The latest inflation figures were released just one week after the European Central Bank decided to leave its three key interest rates unchanged.
The ECB said it expects energy markets to remain highly volatile and warned that the full inflationary effects of recent energy price shocks have not yet fully filtered through the eurozone economy.
Policymakers continue to monitor incoming economic data as they balance persistent inflation against slowing growth across several member states.
The July figures suggest that while inflation remains well below the peaks seen during the energy crisis of previous years, price stability has yet to be fully restored, leaving the ECB facing continued uncertainty over the path of future monetary policy.