Euro zone inflation has surged to another record high, hitting an annual rate of 4.1% in July. It is the highest inflation figure for the currency area since measurements started in 1997.
Belgium, Germany, Italy and Spain all reported record high national inflation levels due to higher food and energy prices. However the cost of crude oil has fallen recently, which economists said could eventually help consumers and bring inflation down below 3.5% by the end of year.
Figures from the European Union statistics office Eurostat show inflation rising from 3.2% at the start of the year to 45 in June. July’s 4.1% figure is a flash estimate and subject to revision.
The high euro zone inflation figure poses a dilemma over interest rates for the European Central Bank, which has an inflation target of just below 2%. But economists said with oil prices off their peak and the region’s economy slowing it is unlikely the ECB will increase interest rates this year.
Separately, unemployment in the euro zone unexpectedly edged up, which is another sign the economy is slowing. Eurostat said the jobless rate in June was 7.3% of the working population. Spain – where a housing boom has turned to bust – now has the highest level at 10.7%.