Friday, December 14, 2007

Eurozone inflation hits 6-year high

Eurozone inflation hit 3.1 per cent in November, the highest for more than six years, according to revised figures that will encourage the European Central Bank to keep talking tough on future interest rate moves.

Preliminary figures had shown an annual inflation rate of 3 per cent, up from 2.6 per cent in October.

The upwards revision highlights the impact of the global surge in oil and food prices. The ECB describes the increase as a "hump" that will subside next year, but Jean-Claude Trichet, ECB president, has admitted that the upswing is proving larger and longer lasting than expected. The central bank's fear is that current higher rates will feed through into higher wage demands, raising longer-term inflation pressures.

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