The inflation rate in the 13-nation euro area rose to 3 percent this month from 2.6 percent in October, the European Union's statistics office in Luxembourg said today.
An 82 percent surge in oil prices since mid-January and rising food prices are driving inflation further above the ECB's 2 percent ceiling. At the same time, easing economic growth may restrain ECB policy makers from increasing interest rates to slow the pace of price increases.
Food-price inflation in particular has become a big issue and we're likely to see that continue in 2008, all this together with the fuel prices practised here in Portugal by the main petrol companies lead by Galp, were we see a weekly rise in the final consumer price at the pump making this countries petrol prices one of the most expensive in the world.
Adverse weather conditions in food-producing countries and increasing demand from emerging economies are pushing up food prices. Wheat futures have risen 71 percent this year. The euro area's October inflation report showed that prices for bread, cheese and other food in Europe increased at the fastest annual pace in more than five years.
Europes inflation risks are clearly on the upside, crude-oil prices rose close to $100 a barrel this month and were at $90.73 today. At the same time, while economic growth remains robust the downside risks are predominant.