Eurozone Inflation Reaches 16-Year High
May 31st, 2008Via: Financial Times:
Eurozone inflation surged to the highest rate for 16 years on the back of sharply higher oil prices as consumer spending in the 15-country region showed further signs of weakness.
Annual inflation in the eurozone reached 3.6 per cent in May, according to official data released on Friday, up from 3.3 per cent in the previous month. That appeared to rule out any chance of an early cut in interest rates by the European Central Bank, which aims to keep inflation “below but close” to 2 per cent.
Evidence also emerged that higher prices were wreaking economic damage by forcing households to retrench. Germany reported a surprise 1.7 per cent drop in April retail sales, extending a 2.2 per cent fall in March.
This week, the European Commission reported eurozone consumer confidence had plunged in May to its lowest level for almost three years.
As well as driving inflation higher, the soaring cost of fuel has led to Europe-wide protests this week – with fishermen blocking ports in France and on Friday giving out fish free in Madrid.
