Eurozone inflation jumped to a record high of 4.0 percent in June, data showed on Monday, cementing expectations the European Central Bank will raise interest rates this week despite slowing economic growth. "It's a bit of a shocker," said Gilles Moec, an economist at Bank of America who like many others had predicted a marginally lower figure of 3.9 percent for the annual inflation rate.
The 4.0 percent year-on-year figure for price growth in the 15-nation euro in June represented a leap from May's 3.7 percent, moving further from the ECB's target of just below 2 percent, European Union statistics office Eurostat said. It was the highest inflation figure for the currency area since measurements started in 1997 and the European Commission seized on the occasion to repeat warnings against demands for big pay rises, saying that would only make matters worse.
ECB officials have given clear signs that the bank will increase its main interest rate by 0.25 percentage point to 4.25 percent at its Governing Board's meeting on Thursday. In Spain, a one-time boomer hit by a housing bust, inflation in June was announced at 5.1 percent, the highest since records began in January 1997, while Belgian inflation was at a near 24-year high of 5.8 percent. Slovenia said on Monday its inflation rate increased to 6.8 percent in June from May's 6.3 percent.
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