Inflation is picking up again in the eurozone, fueling speculation that the European Central Bank (ECB) could raise interest rates at its next meeting in September.

Data released today by Eurostat, the European Union’s statistics office, pointed to a clear increase in inflationary pressures across the bloc.

Eurozone inflation: CPI accelerates to 2.9% in July, with core the real worry

The eurozone Consumer Price Index (CPI) — one of the most closely watched gauges of the inflation trend — rose 2.9% year over year in July, in line with expectations but accelerating from June’s 2.8% increase.

The core reading also strengthened, and by more than forecast: stripping out energy and food prices, core inflation climbed to 2.5% in July, up from 2.4% in June.

It is precisely this acceleration in the core figure that will have put Christine Lagarde’s ECB on alert. In its recent meetings — up to and including the most recent one on July 23 — the central bank has repeatedly stressed the need to watch for potential second-round effects from energy inflation: the risk that a jump in energy prices spreads through the entire economy and turns into the dreaded wage-price spiral.

That spiral describes persistent inflation in which workers demand higher wages to restore their purchasing power and companies raise prices further to cover higher costs, creating a vicious circle.

Did the eurozone inflation numbers just contradict Lagarde?

At the ECB Governing Council’s latest meeting, Lagarde had confirmed the presence of «upside risks to inflation», warning that energy shocks could intensify and that, as a result, broader inflationary dynamics could emerge.

The ECB president had also warned that «extreme weather events and the climate crisis» could push food prices up «more than expected».

At the same time, her reassurance did not go unnoticed: Lagarde had emphasized that second-round effects had not yet materialized.

Does today’s data call all of that into question?

«We are not yet seeing second-round effects», the head of the European Central Bank had noted — an observation that is not entirely borne out by the CPI just released. Quite the opposite, especially when you look at what happened to the core component.

At its July 23 meeting, the ECB left its deposit rate, its main refinancing rate and its marginal lending rate unchanged at 2.25%, 2.40% and 2.65% respectively, in line with expectations, after raising them following the June 11 meeting — the first hike since September 2023.

Eurozone inflation in July: the trend in the CPI’s components

Looking at the trend in the inflation components, the CPI showed that food prices slowed, posting a year-over-year increase of 1.2% in July, down from 1.5%.

The steepest bill came instead from energy prices, which jumped further — up 10%, compared with 8.5% previously.

Services inflation also edged higher, rising 3.3% versus 3.2% in June.

A caveat: the CPI released today by Eurostat is a preliminary reading, which means its trend could be revised up or down, or simply confirmed.

Markets ramp up bets on an ECB rate hike in September

In the meantime, markets wasted no time in ramping up their bets on an ECB forced to raise rates in September — more than they had priced in the hours before the indicator was released.

The monthly trend in the CPI was itself what caught traders’ attention: energy prices rose 2.4% from June, while services prices climbed 1.1%. Fairly robust increases.

Markets are now pricing in monetary tightening by the ECB at its next meeting — a two-day gathering on September 9 and 10, to be held in Berlin — with a probability of around 66%. Bets on a rate hike have thus strengthened, if only slightly, from around 64% at the start of this week.

They also see a total of 38 basis points of rate increases by the end of 2026 and roughly 52 basis points of tightening by mid-2027.

Italian inflation: the figure released today by Istat

Today, Friday, July 31, 2026, Italy also released its inflation data, which decelerated in July.

Here is how Istat, Italy’s national statistics office, put it:

«According to preliminary estimates, in July 2026 the national consumer price index for the whole population (NIC), including tobacco, recorded a change of +0.2% month over month and +2.8% year over year (down from +3.0% the previous month)».

Core inflation held steady in Italy at 1.6%, while the measure excluding energy goods alone weakened from 1.9% to 1.8%.

The statistics office explained that the reversal was driven mainly by the trend in prices of unprocessed food (from +4.4% to +3.8%), non-regulated energy (from +13.3% to +10.6%) and miscellaneous services (from +2.5% to +1.8%).

Accelerating instead were the prices of processed food (from -0.2% to +0.2%), regulated energy (from +9.2% to +14.9%) and transport-related services (from +1.1% to +1.6%).

In any case, Italy’s inflation rate also remained well above the 2% target the ECB aims for. And so a September rate hike is increasingly seen as likely — while, on the other side of the Atlantic and in the wake of the Federal Reserve’s meeting, some are wondering whether US central bank chair Kevin Warsh is playing too much with the fire of inflation.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on July 31, 2026 as «Tassi BCE, dato inflazione euro ha appena smentito Lagarde? Le scommesse dei mercati sui rialzi». It has been translated and adapted for an international audience by the Money.it International desk.