German Inflation Accelerates to 2.8% in July as Energy Costs Climb

German annual inflation accelerated to about 2.8% in July, up from 2.4% in June, according to preliminary euro-area data, reversing the previous month's easing. The pickup was part of a broader eurozone trend, with bloc-wide inflation rising to 2.9% from 2.8% and remaining well above the European Central Bank's 2% target. The main driver was a renewed surge in energy prices, with euro-area energy inflation jumping to about 10% year on year as hostilities involving the US and Iran pushed oil and fuel costs higher. Underlying pressures also firmed, with core inflation, which strips out energy and food, edging up and services inflation ticking higher. For Germany, Europe's largest economy, the reacceleration complicates the outlook after a period of gradual disinflation, squeezing household budgets and business costs at a time of already fragile growth. The energy-led increase highlights how geopolitical shocks continue to feed through to consumer prices across the continent. Persistently above-target inflation could constrain the ECB's room to ease policy, keeping borrowing costs elevated for households and companies in Germany and across the euro area.