The inflation rate across the European Union (EU) rose to 2.6% in July, exceeding the expectations of economists.
A survey by the Reuters news agency found that economists had expected inflation in July to remain unchanged from June’s rate of 2.5%.
Core inflation, which excludes volatile food, energy, alcohol and tobacco prices, rose to 2.9% in July, surpassing consensus forecasts of 2.8%.
Inflation rose in several key European countries, including Germany and France, where it increased to 2.6% in both countries, up from 2.5% in June.
The latest inflation reading comes a day after second-quarter gross domestic product (GDP) showed the European economy gained 0.3% in the three months ended June 30.
Europe’s largest economy, Germany, reported a 0.1% Q2 contraction.
The rise in inflation during July complicates the European Central Bank’s (ECB) plans for lowering interest rates moving forward.
The central bank held rates steady when it met earlier in July after reducing them by 25-basis points in June. Futures traders were anticipating another rate cut in September of this year.
European Central Bank officials have said that any further interest rate reductions will be data driven and decided on a meeting-by-meeting basis.
