Germany's annual inflation rate accelerated to 2.8% in July 2026 from 2.3% in June, exceeding market expectations of 2.7%, according to preliminary estimates. It was the highest reading since April, driven by a sharp pickup in energy inflation to 8.3% from 3.4% as renewed Middle East tensions pushed oil prices higher. Meanwhile, services inflation eased to 2.9% from 3.1%, while food inflation remained unchanged at 0.4%. Core inflation, which excludes energy and unprocessed food, edged down to 2.4% from 2.5%. The EU-harmonized inflation rate also rose to 2.8%, its highest level in three months and well above the European Central Bank's 2.0% target.