Oil price hits Euro inflation rate

1 August 2008

The rising cost of oil and food has taken inflation in Europe to its highest level since the introduction of the Euro, it has been reported.

According to the Independent, official estimates show that the eurozone's inflation rate is twice that of its target, at 4.1 per cent.

Nout Wellink, a member of the European Central Bank's governing council, told the newspaper that the body's "first priority" is the curbing of inflation.

"We must prevent inflation expectations changing. We must make clear that we are guarding against expectations rising, because if they do so, then they will be factored into wages and prices," he said.

The cost of a barrel of light, sweet crude oil jumped by more than $4 (£2) on Wednesday amid fears that supplies are dwindling.

It dropped by $2.69 to settle at $124.08 yesterday, but recent record highs are still likely to see the price of home heating oil and fuel increase in coming months.

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