According to data from Eurostat, the eurozone’s year-over-year consumer price index (CPI) rose to 2.9% in July, up from 2.8% in June. The core CPI, which excludes food and energy, also rebounded unexpectedly to 2.5%, while inflation in the services sector edged higher, indicating that price pressures are spreading to the broader economy.Rising energy prices were the main driver of this inflation rebound, driven by higher oil prices resulting from the conflict in the Middle East. Market expectations for a September rate hike by the European Central Bank (ECB) (ECB) are intensifying, with the interest rate swap market pricing in an approximately 85% probability of a rate hike in September.Analysts believe that while the July data are not conclusive, they have put the ECB on a path toward a rate hike. Furthermore, the eurozone’s second-quarter GDP growth of 0.4%—which exceeded expectations—has further alleviated concerns that a rate hike might dampen economic growth.