[KevO]

just so we stand together with our younger bros across the pond

Rising food and fuel costs pushed UK inflation up to an 11-year high of 3.8% in June from 3.3% in May, figures show.

The rise means inflation is now well above the government's 2% target, and may reduce the chance of a UK rate cut.

The Bank of England, which has already said inflation may top 4% this year, has to balance the need to control inflation with worries over growth.

The RPI inflation measure - often used as a benchmark in pay negotiations - rose to 4.6% in June from 4.3% in May.

The annual rate of inflation is at its highest level since 1997, when the Office for National Statistics started using its current methodology to calculate the figures.

BBC News

[KevO]

seems everybody has jumped on the inflation wagon

Rises in food and energy costs pushed up inflation in the 15-nation eurozone to 4% in June from 3.7% in May.

Confirming estimates made two weeks ago, the Eurostat statistics office said the inflation rate was the highest since measurements began in 1997.

A 16% year-on-year rise in energy costs as oil prices headed above $140 a barrel was to blame, Eurostat said.

The European Central Bank (ECB) raised interest rates to 4.25% at the start of the month to try to contain inflation.

The ECB's target for inflation growth is about 2%, but rising food and fuel prices are making it difficult for the central bank to bring inflation back to this level.

BBC News

and as food and energy prices are set to keep rising I guess that means inflation will to

[energycity]

Yep and it looks likely the UK rate will go higher still:
'Inflation rate soars and economists fear 6% on the way'
[15/07/08, Guardian newspaper]

Meanwhile in Euroland (15 countries) inflation was 3.7% in May and 4% in June; so a clear upwards trend there as well.

[heroineworshipper]

4% is like deflation for U Know Where.

[Snowrunner]

Will be interesting to see if the ECB is going to raise the rate again. I cannot imagine them NOT doing it, even though Spain, UK and Italy will scream bloody murder once more.

[CarlosFerreira]

Will be interesting to see if the ECB is going to raise the rate again. I cannot imagine them NOT doing it, even though Spain, UK and Italy will scream bloody murder once more.

Well, the UK has its own Central Bank, and the ECB doesn't mess with them. But Spain, Portugal, Italy and, I hear, Ireland are going down.

Here in Portugal, the 20 biggest companies in the stock market have lost over 33% average since Jan, 1st. This week has been calamitous in that front.

However, I heard an analyst saying that, as long as Germany is OK and needs to control inflation, the ECB will keep hiking the rate. They need to, even if it means recession - a reset on a troubled economy? Most importantly, I wonder of there will be oil cheap enough to restart. This is not a metaphor,

More problematic, besides gas prices, seems to be food. It's not exactly going through the roof yet, but I've read it's on the region of 5 to 6% increases, helped by strikes and protests.

Gonna get ugly?

[lowem]

It will get ugly when the inflation rates start going into double-digit territory. It will get much, much uglier when the inflation rates go into triple digits.

[MrBill]

The ECB's mandate is to control inflation in the eurozone wherever it is. They do not set monetary policy based on Germany's economic needs. For many years after the launch of the euro interest rates were too high for Germany that joined the EMU with an overvalued currency and burdened with the legacy costs of reunification.

- Inflation in Cyprus will accelerate this year to 5 percent, more than the government's previous forecast, driven by higher oil and food prices, Finance Minister Charilaos Stavrakis said.

``Inflation in Cyprus is mainly because of external factors,'' Stavrakis told reporters in Nicosia today. Inflation, which averaged 4.6 percent in the first half of the year, is being driven by the eastern Mediterranean island's near total dependence on oil imports and a greater weighting of foods in the price index, he said.

Cyprus imports about 95 percent of its fuel, compared with an average 60 percent for the other 26 European Union countries, according to Stavrakis. Soaring consumer prices prompted the European Central Bank to raise its key interest rate to a seven- year high of 4.25 percent this month. Stavrakis on July 7 called the move ``the most sensible decision.'' Crude prices have almost doubled in the past year, pushing the euro-region inflation rate to the highest in more than 16 years in June.

Economic growth will ease to 3.7 percent from 4.4 percent in 2007, as the global slowdown hurts the island's financial services and construction industries. Growth will slow this year in part as a weaker pound and falling house prices in the U.K. hurt travel and investment on the island.

Increased government costs to import water to the drought- stricken island will also hurt finances. Slower growth will reduce revenue and shrink the budget surplus to between 0.1 percent and 0.6 percent of GDP, from 3.3 percent last year, said Stavrakis.

source: July 16 (Bloomberg)

Spain, Portugal, Italy, Greece and Ireland benefited from rates that were lower than their own growth and financial situation merited. Look at their bond yields both before and after joining the EMU. Too bad that they did not use that gift as a chance to reform their economies. Now they will suffer. And so they should. If they cannot reform themselves, they should be shown the door. The success of the EMU depends on countries adhering to the Maastricht Criteria. Not blaming the ECB for higher rates to tame eurozone secondary inflation pressures.

[mattduke]

The collapse of the pound on the foreign exchanges is keeping food price inflation at painful levels, with the heaviest impact falling on poorer households and pensioners.

independent