European Infaltion Rises More Than Expected

European inflation rose more than expected to 3.6%, nearly a 16 year high .Energy prices increased and food costs reach record levels, with dairy products and breads and cereals seeing major jumps of 14.3% and 9.0% respectively. The breakneck pace of inflation is putting pressure on companies as wage demands increase, which is increasing policy official’s anxieties. The ECB has maintained their concerns over rising costs which was reinforced by board member Juergen Stark yesterday. The committee member hinted that not only was a rate cut not in the near-term future but that the current benchmark may not be high enough to achieve price stability in the region. This has opened the door for a possible rate hike, which has the Euro threatening all time highs again.

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