Eurozone inflation rises to 2.1% in July, as expected

Headline inflation in the eurozone rose to 2.1% year-over-year in July from 2.0% in June, according to the latest data from Eurostat.

The figure was in line with consensus and the initial estimate, while core inflation rose to 1.1% last month from 1.0 in June, also in line with consensus and the flash estimate.

Energy inflation was the main driver, increasing to 9.5% from 8% in June, while food, alcohol and tobacco inflation slipped to 2.5% from 2.7% in June.

In the European Union, meanwhile, annual inflation ticked up to 2.2% in July from 2.1% the month before.

The lowest annual rates were seen in Greece, Denmark and Ireland, while the highest rates were recorded in Romania, Bulgaria, Hungary and Estonia.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Base effects in oil prices suggest that the July was the peak in energy inflation, indicating that headline inflation in the euro area will fall between now and the end of the year. We look for a fall to 1.6-to-1.7%.

"The increase in the core rate was driven by a further rebound in non-energy goods inflation to 0.5% and a small increase in services inflation to 1.4%. Core inflation will not reach the ECB’s target of just under 2% anytime soon, but we think an increase to 1.3% towards the end of the year is a decent bet."