Euro zone inflation jumped to another record high of 4.1% year-on-year in July as forecast, but a bleak economic outlook may discourage a further interest rate increase this year.
Price growth in the 15-nation euro area accelerated from July's 4%, moving further above the European Central Bank's target of just below 2%, statistics office Eurostat said in its flash estimate for July. It was the highest inflation figure for the currency area since measurements started in 1997.
Analysts had expected June inflation to rise to 4.1%, boosted by soaring energy and food prices.
Separately, unemployment in the euro zone unexpectedly edged up, in another sign of a slowing economy. Eurostat revised up the jobless rate for May to 7.3% from a previous reading of 7.2%, and said the figure held stable in June.
Economists had expected June unemployment to come in at 7.2%.
The euro zone economy is burdened by a strong euro, soaring prices of food and energy, tight credit conditions and an increasingly visible slowdown in other major industrialised countries.
Economists said that although the high inflation figure could revive talk about a second ECB rate rise this year, the most likely scenario was for the bank to refrain from a hike.
The ECB's policymakers stress the importance of anchoring inflation expectations. The bank increased its main interest rate by 0.25 percentage points to 4.25% in early July. The ECB wants to limit the impact of growing energy and food costs on prices in the wider economy, trying to prevent what it calls a wage-price spiral.
Eurostat's inflation estimate contained no monthly data or detailed breakdown but separate country data has shown inflation in Germany, the euro zone's biggest economy, holding steady at 3.3%, the highest level since December, 1993.
Italy said today that its inflation sped up to a record 4.1% in July year-on-year from 4% in June. In Spain, a one-time boomer hit by a housing bust, inflation in July climbed to 5.3% from 5.1% in June, the highest since records began in January 1997, while Belgian July inflation hit a 24-year high of 5.9%.
