Euro zone inflation reached a new record high of 8.9% year-on-year in July, the EU’s statistics office has confirmed, with the core measure, excluding the most volatile components and key for monetary policy, also sharply up.
The European Union’s statistics office Eurostat said consumer prices in the 19 countries using the euro rose 0.1% month-on-month in July for a 8.9% year-on-year increase, the highest since the euro was created in 1999.
Eurostat said that of the total, 4.02 percentage points came from more expensive energy – the costs of which surged because of Russia’s invasion of Ukraine – and 2.08 percentage points from more expensive food alcohol and tobacco.
But even when these most volatile components are excluded, in what the European Central Bank calls core inflation and watches closely in interest rate decisions, prices still were 5.1% year-on-year higher in July. The ECB’s headline inflation target is 2.0%
Last month, the bank started a tightening cycle after years of ultra-loose monetary policy, but still the prices of services, which create more than two thirds of the euro zone’s GDP, rose 3.7% year-on-year in July, adding 1.6 percentage point to the final outcome.
Industrial goods were 4.5% more expensive than 12 months earlier, adding 1.16 percentage point to the final headline figure.
The data confirms a previous flash estimate for Ireland for July of 9.6%. That was the second month running that the HICP for this country came in at that level. The Central Statistics Office measure of inflation, which is calculated differently, was 9.1% for July.