World Trade

EU core inflation increased sharply in July to 8.9% y/y.

(Reuters) Eurozone inflation hit a new record high of 8.9% year-over-year in July, the EU’s statistics office announced Thursday. The core measure, which excludes volatile components, also rose substantially.

Eurostat reported that consumer prices in the 19 eurozone countries rose 0.1% month on month and 8.9% year on year in July, the highest rate since 1999.

Eurozone inflation rate

Eurostat said that Russia’s invasion of Ukraine caused the cost of energy to go up by 4.02 percentage points and that the cost of food, alcohol, and cigarettes went up by 2.08 percentage points.

Eurozone inflation data

Even without these volatile components, what the ECB calls core inflation, prices were 5.1% higher year-over-year in July.

The ECB targets 2.0% headline inflation.

The ECB launched a tightening cycle last month following years of ultra-loose monetary policy, but service prices, which make up two-thirds of euro zone GDP, grew 3.7% year-over-year in July, adding 1.6 percentage points to the final result.

Industrial goods prices are up 4.5% year-over-year, adding 1.16 percentage points to the headline result.

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