Euro zone inflation hits record high

Euro zone inflation hit a new record high of 3.3 per cent in February, the European Union's statistics office said.

Euro zone inflation hit a new record high of 3.3 per cent in February, the European Union's statistics office said.

Eurostat this morning revised the figure up from a previous estimate of 3.2 per cent for the 15-nation single currency zone, itself a joint record high at the time.

Compared with January, prices rose 0.3 per cent, Eurostat said, in line with the consensus forecast.

Energy prices jumped 10.4 per cent in February from the same month last year. The food and transport components - both sensitive to high oil prices - grew by 5.8 and 5.4 per cent respectively.

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Without the volatile unprocessed food and energy costs, or what the European Central Bank calls core inflation, prices grew by 2.4 per cent year-on-year and 0.5 per cent month-on-month.

The ECB, which wants annual inflation to be just below 2 per cent, watches the core inflation measure carefully for signs of high oil prices filtering through to other sectors of the economy.

The bank has left interest rates unchanged at 4 per cent because of signs of an economic slowdown, which could ease pressure on prices later this year.

In the whole European Union of 27 countries, inflation in February was 3.4 per cent year-on-year and 0.4 per cent month-on-month.

Also today, Eurostat said labour costs in the fourth quarter of 2007 rose by an annual 2.7 per cent, picking up speed from the previous three months when costs rose 2.5 per cent.

Wages and salaries grew by 2.9 per cent while non-wage costs were up 2.2 per cent, Eurostat said.