Euro Area Inflation Revised Up to 3.3 Pct in February.
Higher prices for fuel, heating, dairy products and bread pushed inflation in the euro currency zone to 3.3 percent in February, well above the European Central Bank's target, the European Union said Friday.
The EU statistics office Eurostat revised upward a first estimate of 3.2 percent for the month, the same figure for January. Soaring inflation puts pressure on the central bank and finance ministers of the 15 nations that use the euro to curb racing costs for basic goods.
Worried about tight credit conditions, the ECB has so far held off raising interest rates that would help cool inflation -- now well above its recommended guideline of just under 2 percent. Instead it has called on others to avoid a price spiral, telling unions and governments to avoid big pay increases.
Price increases risk hurting the economy because they discourage shoppers from making bigger purchases over worries about shelling out more for groceries and gasoline. Consumer confidence -- one of the main drivers of economic growth -- froze last month.
Inflation in the EU's largest economy, Germany, was 2.9 percent. The Netherlands -- at 2 percent -- was the only country with a lower figure. Inflation in France was 3.2 percent. Some of the smaller euro nations had higher rates. Slovenia tops the scale at 6.4 percent, with Greece at 4.5 percent and Spain -- hit by a slowing housing market -- was at 4.4 percent.
Fast-growing eastern European states saw huge surges, a trend that will make it difficult for them to join the euro soon. Latvia's inflation rate was a massive 16.5 percent, Bulgaria was 12.2 percent and Estonia 11.5 percent. Eurostat had some comfort for shoppers, saying prices for telecoms, cars and clothes have fallen from a year ago.
EU Leaders Asks Banks to Reveal Losses
EU leaders urged international banks to help calm markets by revealing recent losses, wrapping up two days of talks that come to a close Friday with a report showing inflation in the euro area hit a new high. Yearly inflation in the 15 nations that share the euro hit a revised 3.3 percent last month, the EU statistical agency said Friday -- setting a new record as prices for oil and food surged.
The dollar's extended slump was central to the discussions. Just as Slovenian Prime Minister Janez Jansa called the euro's strength a a "serious issue," the euro hit a new high against the U.S. dollar, peaking at $1.5652. A more expensive euro makes German cars and French wines tougher to sell to the EU's biggest trade partner, the U.S. A strong euro, however, could ease inflation by cutting the import bill for dollar-priced oil.
The dollar has declined on pessimism about the U.S. economy, which has fed expectations that the Federal Reserve will continue to lower interest rates to jump-start the economy. EU leaders insisted in a draft declaration that the fundamentals of the economy remain strong. But the main lever to curb soaring inflation and runaway exchange rates -- interest rates -- lies outside their hands, and in the control of the fiercely independent central banks.
EU leaders urged member nations to hold off measures such as fuel taxes that would take more money out of shoppers' pockets as they shell out more for basics. The leaders plan to issue a statement expressing concern about "fragile" financial markets with credit tight and banks reluctant to disclose losses from complex investments in U.S. mortgage-backed securities. Those securities began to unravel rapidly last summer.
Banks worldwide have written off more than $150 billion in the past half-year, including large fourth-quarter write-offs by major European banks like UBS AG and Credit Suisse. Yet Standard & Poor's Ratings Services said Thursday it estimates writedowns of subprime asset-backed securities could reach $285 billion globally, up from its previous projection of $265 billion.
The statement from the EU will urge banks to provide "prompt and full disclosure of exposures to distressed assets." They stressed that the financial industry must heal itself by upgrading valuations and reforming credit rating agencies, warning that governments stand ready "to take regulatory and supervisory actions where necessary."
Higher prices for fuel, heating, dairy products and bread pushed inflation in the euro currency zone to 3.3 percent in February, well above the European Central Bank's target, the European Union said Friday.
The EU statistics office Eurostat revised upward a first estimate of 3.2 percent for the month, the same figure for January. Soaring inflation puts pressure on the central bank and finance ministers of the 15 nations that use the euro to curb racing costs for basic goods.
Worried about tight credit conditions, the ECB has so far held off raising interest rates that would help cool inflation -- now well above its recommended guideline of just under 2 percent. Instead it has called on others to avoid a price spiral, telling unions and governments to avoid big pay increases.
Price increases risk hurting the economy because they discourage shoppers from making bigger purchases over worries about shelling out more for groceries and gasoline. Consumer confidence -- one of the main drivers of economic growth -- froze last month.
Inflation in the EU's largest economy, Germany, was 2.9 percent. The Netherlands -- at 2 percent -- was the only country with a lower figure. Inflation in France was 3.2 percent. Some of the smaller euro nations had higher rates. Slovenia tops the scale at 6.4 percent, with Greece at 4.5 percent and Spain -- hit by a slowing housing market -- was at 4.4 percent.
Fast-growing eastern European states saw huge surges, a trend that will make it difficult for them to join the euro soon. Latvia's inflation rate was a massive 16.5 percent, Bulgaria was 12.2 percent and Estonia 11.5 percent. Eurostat had some comfort for shoppers, saying prices for telecoms, cars and clothes have fallen from a year ago.
EU Leaders Asks Banks to Reveal Losses
EU leaders urged international banks to help calm markets by revealing recent losses, wrapping up two days of talks that come to a close Friday with a report showing inflation in the euro area hit a new high. Yearly inflation in the 15 nations that share the euro hit a revised 3.3 percent last month, the EU statistical agency said Friday -- setting a new record as prices for oil and food surged.
The dollar's extended slump was central to the discussions. Just as Slovenian Prime Minister Janez Jansa called the euro's strength a a "serious issue," the euro hit a new high against the U.S. dollar, peaking at $1.5652. A more expensive euro makes German cars and French wines tougher to sell to the EU's biggest trade partner, the U.S. A strong euro, however, could ease inflation by cutting the import bill for dollar-priced oil.
The dollar has declined on pessimism about the U.S. economy, which has fed expectations that the Federal Reserve will continue to lower interest rates to jump-start the economy. EU leaders insisted in a draft declaration that the fundamentals of the economy remain strong. But the main lever to curb soaring inflation and runaway exchange rates -- interest rates -- lies outside their hands, and in the control of the fiercely independent central banks.
EU leaders urged member nations to hold off measures such as fuel taxes that would take more money out of shoppers' pockets as they shell out more for basics. The leaders plan to issue a statement expressing concern about "fragile" financial markets with credit tight and banks reluctant to disclose losses from complex investments in U.S. mortgage-backed securities. Those securities began to unravel rapidly last summer.
Banks worldwide have written off more than $150 billion in the past half-year, including large fourth-quarter write-offs by major European banks like UBS AG and Credit Suisse. Yet Standard & Poor's Ratings Services said Thursday it estimates writedowns of subprime asset-backed securities could reach $285 billion globally, up from its previous projection of $265 billion.
The statement from the EU will urge banks to provide "prompt and full disclosure of exposures to distressed assets." They stressed that the financial industry must heal itself by upgrading valuations and reforming credit rating agencies, warning that governments stand ready "to take regulatory and supervisory actions where necessary."
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