Euro Zone Inflation Holds at Record High of 3.2 Percent in February.
Yearly inflation in the 15 nations that use the euro currency held at a record high of 3.2 percent in February, the EU statistics agency Eurostat said Monday. Prices for transport fuel, heating oil, dairy products and cereals are pushing up the inflation rate at the fastest pace since euro cash was introduced in 2002.
The rate is the same as January and well above the European Central Bank's guideline of just under 2 percent. The bank meets Thursday to decide whether to raise or lower interest rates that it has left unchanged since last June.
The ECB has so far held back from cooling high prices by raising borrowing costs over worries that this might damage a slowing economy -- and hurt banks that are still reluctant to take on risky loans in the wake of last summer's credit crisis.
High inflation and a strong euro may eat into the two main drivers of euro zone growth -- European spending at home and export orders from abroad. Alarmed at paying more at the gas pump and the supermarket, shoppers seem to have halted a spending surge with consumer confidence freezing last month.
At the same time, the euro currency rocketed to a new high against the U.S. dollar on Friday, making exports to the United States -- Europe's main trading partner -- more expensive while cutting its growing bill for dollar-priced oil imports. The euro bought $1.5238 late Friday.
The European Commission expects inflation to stay high until the end of this year, averaging 2.6 percent and warning this could worsen if pay hikes fuel a high price spiral. The EU executive last month cut its growth forecast for the euro currency zone to 1.8 percent for 2008, saying that the global economy looks "unusually uncertain.
Yearly inflation in the 15 nations that use the euro currency held at a record high of 3.2 percent in February, the EU statistics agency Eurostat said Monday. Prices for transport fuel, heating oil, dairy products and cereals are pushing up the inflation rate at the fastest pace since euro cash was introduced in 2002.
The rate is the same as January and well above the European Central Bank's guideline of just under 2 percent. The bank meets Thursday to decide whether to raise or lower interest rates that it has left unchanged since last June.
The ECB has so far held back from cooling high prices by raising borrowing costs over worries that this might damage a slowing economy -- and hurt banks that are still reluctant to take on risky loans in the wake of last summer's credit crisis.
High inflation and a strong euro may eat into the two main drivers of euro zone growth -- European spending at home and export orders from abroad. Alarmed at paying more at the gas pump and the supermarket, shoppers seem to have halted a spending surge with consumer confidence freezing last month.
At the same time, the euro currency rocketed to a new high against the U.S. dollar on Friday, making exports to the United States -- Europe's main trading partner -- more expensive while cutting its growing bill for dollar-priced oil imports. The euro bought $1.5238 late Friday.
The European Commission expects inflation to stay high until the end of this year, averaging 2.6 percent and warning this could worsen if pay hikes fuel a high price spiral. The EU executive last month cut its growth forecast for the euro currency zone to 1.8 percent for 2008, saying that the global economy looks "unusually uncertain.
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