Euro zone inflation has hit an eight high as energy and food prices continued to drive inflation in May, the European Commission said today.
Heating oil has increased more than 17 per cent, fuel prices for transport have increased more than eight per cent but all other energy components, particularly electricity prices, have been driving inflation down, a Commission spokesman said.
Unprocessed food like meat has risen by 9.2 per cent, vegetables by 11.3 per cent and fruit by 9.4 per cent, he added.
It was the 11th consecutive month that inflation has been above the ECB's two per cent tolerance ceiling.
But economists believed the worst may be over. "I'm quite sure that this is the peak in the current inflation cycle. From now on we should see a decline in the annual rate," said Mr Adolf Rosenstock at Nomura International in Frankfurt.
The May rate was by far the highest since the euro zone was formed at the start of 1999 but inflation data can be calculated further back using national rates.
Policymakers have predicted inflation will be back below the ECB's two per cent threshold at the beginning of 2002.
"I think another (ECB) rate cut is on its way," said Mr Steven Pearson at Halifax bank in London.
"Although today's numbers do look pretty awful, if you take away the energy prices which are up two per cent on the month and look at the core rate excluding food ... it's only around the ECB's target of two per cent," he added.