Higher Fuel and Food Prices Keep Euro Inflation at 3.1 Percent in December.
Higher fuel and food prices kept year-on-year inflation in the euro area at 3.1 percent in December, the EU statistics agency Eurostat said Wednesday. But soaring household bills did not hold European shoppers back from buying cars in the last month of the year with overall sales rising by 1.2 percent from a year ago despite a massive slump in Germany.
Inflation in the countries sharing the euro currency is at its highest level since euro cash was launched in 2002, staying the same as November and Eurostat's first estimate for December. Eurostat said fuel for transport, milk, cheese, eggs and heating oil were the main factors raising prices in December, with higher prices for bread and cereals, education, restaurants and cafes following close behind.
Inflation in the 27-nation European Union hit 3.2 percent, up from 3.1 percent in November. It is still unclear how far inflation will hit consumer spending, now one of the main drivers of growth in the euro area. Consumer confidence dropped sharply but unemployment is still at a record low as Europe's recent boom creates new jobs.
The European Central Bank, which acts to cool higher prices by cutting borrowing costs, has been reluctant to hike interest rates in the wake of a credit crisis that made banks reluctant to lend money.
However, car makers managed to find some sunshine in December sales after soaring oil prices, tax changes, tighter credit and less spending power hit western European shoppers during the year. Four out of its five biggest European markets posted growth in the month, the European car manufacturers' association ACEA said Wednesday.
German sales shrank by a fifth after having risen sharply last December ahead of a Jan. 1 sales hike. Similar factors were at work in France this year, with sales climbing 21 percent before a new car registration tax comes in this month. Italy also saw sales grow 14 percent while Spain was up 6 percent and Britain rose 3 percent.
But overall western European sales were sluggish for the month, up just 0.4 percent. Fast growing eastern European countries were far happier to spend, with sales up 11 percent -- although this was for a tenth of the cars that left showrooms in richer parts of the region.
Higher fuel and food prices kept year-on-year inflation in the euro area at 3.1 percent in December, the EU statistics agency Eurostat said Wednesday. But soaring household bills did not hold European shoppers back from buying cars in the last month of the year with overall sales rising by 1.2 percent from a year ago despite a massive slump in Germany.
Inflation in the countries sharing the euro currency is at its highest level since euro cash was launched in 2002, staying the same as November and Eurostat's first estimate for December. Eurostat said fuel for transport, milk, cheese, eggs and heating oil were the main factors raising prices in December, with higher prices for bread and cereals, education, restaurants and cafes following close behind.
Inflation in the 27-nation European Union hit 3.2 percent, up from 3.1 percent in November. It is still unclear how far inflation will hit consumer spending, now one of the main drivers of growth in the euro area. Consumer confidence dropped sharply but unemployment is still at a record low as Europe's recent boom creates new jobs.
The European Central Bank, which acts to cool higher prices by cutting borrowing costs, has been reluctant to hike interest rates in the wake of a credit crisis that made banks reluctant to lend money.
However, car makers managed to find some sunshine in December sales after soaring oil prices, tax changes, tighter credit and less spending power hit western European shoppers during the year. Four out of its five biggest European markets posted growth in the month, the European car manufacturers' association ACEA said Wednesday.
German sales shrank by a fifth after having risen sharply last December ahead of a Jan. 1 sales hike. Similar factors were at work in France this year, with sales climbing 21 percent before a new car registration tax comes in this month. Italy also saw sales grow 14 percent while Spain was up 6 percent and Britain rose 3 percent.
But overall western European sales were sluggish for the month, up just 0.4 percent. Fast growing eastern European countries were far happier to spend, with sales up 11 percent -- although this was for a tenth of the cars that left showrooms in richer parts of the region.
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