Business

Inflation in eurozone rises in December

The euro sign in front of the European Central Bank
Image caption Eurozone inflation is above its 2% target at 2.2% and is likely to stay above it in the near future

Rising fuel prices helped push annual eurozone inflation up to 2.2% in December, from 1.9% in November, according to official figures.

Consumer prices in countries using the euro climbed 0.6% on a monthly basis, Eurostat added.

The data comes one day after the head of the European Central Bank (ECB) warned the region was threatened by rising prices.

The ECB has a target of 2% for eurozone inflation. A year ago it stood at 0.9%.

More expensive fuel has a particular impact on the cost of transport and of food production and delivery.

Overall energy prices jumped 2.3% between November and December, leaving prices 11% higher in December 2010 than in the same month in 2009.

'Temporary increase'

The eurozone country with the highest rate of inflation was Estonia, which was not a member of the bloc last year, only joining the 16 existing euro-using countries at the start of this year.

Its inflation rate is 5.4%, followed by long-term eurozone member, Greece, at 5.2%.

Slovakia had the lowest rate of price rise growth, up by just 1.2%.

On Thursday, the ECB left interest rates unchanged for the 20th month in a row at its monthly meeting.

But its president, Jean-Claude Trichet, also warned that the eurozone inflation rate may rise further in the coming months, as a result of higher energy costs.

Mr Trichet said inflation could "temporarily increase further" and is "likely to stay above 2% until falling back towards the end of the year".

He also called on governments with high debt levels to introduce further measures to cut their budget deficits, particularly through spending cuts.

Global issue

Other data released on Friday pointed to the extent of inflation in other countries.

The increased price of oil contributed to the price of goods leaving UK factories rising by 4.2% in December, the Office for National Statistics said.

In India, the wholesale price index (WPI) rose to 8.43% in December - the highest in a year.

And in an attempt to curb spiralling food prices, the prime minister's office said the government would review the import and export of essential commodities and sell onions at a restricted price.

Meanwhile China's central bank also stepped up its fight against inflation by raising lenders' required reserves for the fourth time in just over two months.

By forcing banks to hold more cash, Beijing hopes to drain excess money from the economy and ease rising prices.

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