Euro Area Inflation Hits Annual High of 3.5 Pct in March, Well Above Target As Economy Lags.
Yearly inflation in the 15 nations that use the euro hit a record high of 3.5 percent in March driven by rising fuel and food prices, the European Union's statistical agency said Monday.
Inflation was up from 3.3 percent in February, running far above the European Central Bank's guideline of just under 2 percent as worries over banks' reluctance to lend has held it back from the usual move of cooling inflation by hiking borrowing costs.
The preliminary March estimate would be the fastest pace of price increases since Eurostat started keeping records 12 years ago for the countries that launched the common currency in 1999.
High prices for transport fuel, heating oil, bread, dairy products and vegetables have pushed up inflation in recent months and are blamed for holding back household spending on other items -- eating into one of the main drivers of economic growth in the region.
The European Commission said the 3.5 percent inflation estimate was more than it had expected. "Obviously oil is running at more than $100 a barrel so these figures shouldn't be all that surprising even though they are higher that what we expected," said EU spokeswoman Amelia Torres.
Eurostat's figure is expected to be confirmed April 16, explaining what is pushing up the average cost of consumer goods. The European Commission last month slashed its forecast for the euro area to grow by 1.8 percent this year, saying the global economy looked "unusually uncertain" as the U.S. economy slows and borrowers see tighter credit conditions in the wake of the recent banking crisis.
Business confidence weakened in March with the EU executive's economic sentiment indicator sliding below a long-term average to 99.6 percent from 100.2 in February. Financial services confidence hit an all-time low as managers were far more downbeat than they were a month ago, expecting demand to worsen substantially.
The services and construction sectors were more pessimistic than they were last month but industry, retailers and consumers saw no change in their feelings about the economy. Another survey of industry managers picked up in March after sliding for three months in a row. The European Commission said this pointed to "sustained industrial production growth in the first quarter of this year."
The business climate indicator rose to 0.80 from 0.71 in February as managers saw positive trends in recent production and order books although they saw lower demand and export orders ahead.
Yearly inflation in the 15 nations that use the euro hit a record high of 3.5 percent in March driven by rising fuel and food prices, the European Union's statistical agency said Monday.
Inflation was up from 3.3 percent in February, running far above the European Central Bank's guideline of just under 2 percent as worries over banks' reluctance to lend has held it back from the usual move of cooling inflation by hiking borrowing costs.
The preliminary March estimate would be the fastest pace of price increases since Eurostat started keeping records 12 years ago for the countries that launched the common currency in 1999.
High prices for transport fuel, heating oil, bread, dairy products and vegetables have pushed up inflation in recent months and are blamed for holding back household spending on other items -- eating into one of the main drivers of economic growth in the region.
The European Commission said the 3.5 percent inflation estimate was more than it had expected. "Obviously oil is running at more than $100 a barrel so these figures shouldn't be all that surprising even though they are higher that what we expected," said EU spokeswoman Amelia Torres.
Eurostat's figure is expected to be confirmed April 16, explaining what is pushing up the average cost of consumer goods. The European Commission last month slashed its forecast for the euro area to grow by 1.8 percent this year, saying the global economy looked "unusually uncertain" as the U.S. economy slows and borrowers see tighter credit conditions in the wake of the recent banking crisis.
Business confidence weakened in March with the EU executive's economic sentiment indicator sliding below a long-term average to 99.6 percent from 100.2 in February. Financial services confidence hit an all-time low as managers were far more downbeat than they were a month ago, expecting demand to worsen substantially.
The services and construction sectors were more pessimistic than they were last month but industry, retailers and consumers saw no change in their feelings about the economy. Another survey of industry managers picked up in March after sliding for three months in a row. The European Commission said this pointed to "sustained industrial production growth in the first quarter of this year."
The business climate indicator rose to 0.80 from 0.71 in February as managers saw positive trends in recent production and order books although they saw lower demand and export orders ahead.
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