Eurozone inflation up slightly in July

FRANKFURT

Eurozone inflation increased slightly in July after energy prices climbed due to the war in the Middle East, official data showed on July 31.

Consumer price rises in the single currency area accelerated to 2.9 percent this month from 2.8 percent in June, the EU's statistics agency said, in line with predictions by analysts for Bloomberg.

The figure is still well above the European Central Bank's two-percent target, and ECB chief Christine Lagarde warned last week that the energy shock from the US-Iran war "could intensify further".

The ECB on July 23 kept its key deposit rate unchanged but opened the door to a rise in September as fresh fighting in the Middle East threatens to send prices higher.

The United States and Iran traded new military attacks this month, but mediator Pakistan insisted on Thursday negotiations between the two sides are ongoing.

Of particular importance for the ECB, core inflation — which strips out volatile energy and food prices — accelerated slightly to 2.5 percent in July after slowing to 2.4 percent last month.

Eurostat data also showed energy prices rose by 10 percent in July, up from 8.5 percent in June.

But food and drinks inflation slowed to 1.2 percent this month, down from 1.5 percent last month.