Eurozone inflation a 'concern': ECB

 

Current record inflation in the 15 nations sharing the euro is a "reason of concern" and must be contained, ECB executive board member Juergen Stark said on Tuesday.

 

With eurozone inflation currently running at the highest rate on record, Stark told a conference in Brussels that "the high level is having an adverse effect on consumer confidence."

 

"Containing these inflationary pressures is therefore crucial," he said.

 

Stark also called for moderation in wage negotiations on concerns that big hikes in pay packages could fuel an inflationary spiral.

 

"Once inflation expectations have come unanchored and a price-wage spiral has started, restoring stability will be very costly in economic terms," he said.

 

Inflation in the 15 eurozone countries jumped in March to 3.5 per cent – the highest level since the bloc was formed in 1999, according to official EU data.

 

The European Central Bank strives to keep inflation close to but less than 2 per cent in the medium term, but soaring oil and food prices have seriously complicated its task.

 

Last week, the ECB left its main short-term interest rate unchanged at 4 per cent, where it has been since June because of concerns about keeping inflation under control. (AFP)