Euro zone inflation boosts chance of ECB rate hike

Euro zone inflation rose further above the European Central Bank’s target in April with a surge in energy costs – crude oil prices increased 38 percent in the last six months.

At the same time there was a sharp drop in the European Commission’s latest ‘economic sentiment’ survey which fell for the second month in a row.

However economists say the late timing of Easter may have distorted the figures.

Inflation in the 17 countries using the euro rose to 2.8 percent year-on-year this month from 2.7 percent a month earlier. It is the highest level since October 2010, when it was 3.2 percent.

The figures increase the chances the European Central Bank will again put up the cost of borrowing in June.

ECB policymakers raised the bloc’s main interest rate from record lows of one percent to 1.25 percent in April.

They are concerned about the impact on consumer prices of rising costs of energy and food.

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