1235 GMT - The current heatwave in Europe is increasing risks of inflation, Felix Schmidt at Berenberg says in a note. "Very low water levels in German rivers are causing supply-chain problems, and the ongoing drought could lead to lower harvests and thus cause food prices to rise," he says. Eurozone inflation increased in July, driven by higher energy prices, and is unlikely to alter the European Central Bank's policy outlook. "The ECB will focus on whether energy prices ease in coming weeks before its September meeting, with August inflation data likely to be more important," Schmidt says.
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