September 14, 2012 / 9:13 AM / 5 years ago

Energy drives euro zone inflation higher in August

People make their shopping at a supermarket in Lisbon August 30, 2011. REUTERS/Jose Manuel Ribeiro

BRUSSELS (Reuters) - Fuel and transport costs drove euro zone inflation higher for the first time in 11 months in August, limiting the capacity of the European Central Bank to cut interest rates further.

Consumer inflation in the 17-nation euro zone was 2.6 percent in August, the EU statistics office Eurostat said on Friday, confirming its earlier estimate. It was the first increase since September 2011.

Inflation had been at 2.4 percent in May, June and July.

Month-on-month, Eurostat said prices had risen by 0.4 percent in August, compared with a 0.5 percent fall in July.

Excluding energy and food, alcohol and tobacco, whose prices also rose sharply in the month, the annual inflation rate was 1.5 percent, with prices for communications the heaviest fallers, down 3.1 percent year-on-year.

Transport prices were 4.8 percent higher in August than a year earlier, alcohol and tobacco prices were up 4.5 percent and housing was 4.1 percent more expensive.

Brent crude futures rose to as high as $117 per barrel in August, although the euro appreciated against the dollar during the month. The price had been below $100 per barrel for much of June.

After communications, prices for recreation and culture and education fell the most.

When the flash estimate was released at the end of August, some economists felt inflation would rise further in September.

The ECB, which targets inflation below but close to 2 percent, last week increased its estimates for price rises this year and next to between 2.4 and 2.6 percent for 2012 and between 1.3 and 2.5 percent in 2013.

The central bank agreed last week to launch a new and potentially unlimited bond-buying program, but kept its main interest rate unchanged at a record low of 0.75 percent.

Separately on Friday, Eurostat said that the number of people employed in the euro zone was stable in the second quarter at 146.4 million, with an increase of employment in real estate and a decline in financial and insurance activities.

Employment declined during the previous three quarters and in the second quarter of 2012 was 0.6 percent below its level a year earlier.

Unemployment in the single currency area has steadily risen, hitting a record high of 11.3 percent in June and July.

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Reporting By Philip Blenkinsop; editing by Rex Merrifield

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