Monthly price growth in Europe reached 8.9%, surpassing the June record of 8.6%. Experts say that the main driver of inflation is the rise in energy prices due to the war in Ukraine.

The sharp rise in energy prices due to the war in Ukraine leads to the fact that inflation in the eurozone sets new records. Thus, in July, consumer prices rose by 8.9 percent compared to the same month last year. These are preliminary data on the assessment of aggregate price growth, published on Friday, July 29, by the European statistical office Eurostat.

At the same time, economists expected that compared to June, the indicator would not change and amount to 8.6 percent in annual terms. In May, the pan-European inflation amounted to 8.1 percent, in April – 7.4 percent. This means that the current inflation rate is still well above the European Central Bank’s (ECB’s) target of 2 percent.

Experts and the head of the ECB, Christine Lagarde, have already initiated an increase in interest rates due to a sharp rise in inflation. A week ago, on Thursday, the ECB announced a 50 basis point hike in its key interest rate for the first time in eleven years. This is twice as much as originally announced. Compared to other central banks, the ECB’s reaction was belated. Some observers believe that a further increase is possible. The next meeting of the ECB on interest rates will be held on September 8 in Frankfurt am Main.

The highest inflation rate in the eurozone is in the Baltic countries

According to Eurostat, energy prices rose 39.7 percent year-on-year in July after a 42 percent rise in June. Unprocessed food prices rose by 11 percent, while prices for services rose by 3.7 percent.

The highest inflation rate in the euro area was again registered in the three Baltic countries and amounted to more than 20 percent. In Germany, the inflation rate, calculated by European standards, was 8.5 percent.