European Inflation Jumps to 20-Month High

European inflation accelerated to the fastest pace in more than 1 1/2 years on rising energy costs.

Euro-area consumer prices rose 1.7 percent from a year earlier in July after increasing 1.4 percent in June, the European Union statistics office in Luxembourg said today. That’s the fastest inflation since November 2008.

European companies may have more scope to raise prices and add workers over the coming months as the economy shows signs of weathering a stronger euro and the Greece-led fiscal crisis. Economic confidence rose to the highest in more than two years in July and German unemployment declined, data this week showed. Volkswagen AG, Europe’s biggest carmaker, yesterday reported its biggest quarterly profit in two years.

Today’s July inflation report is an initial estimate and the statistics office will release a breakdown including the core rate on Aug. 16. In June, core inflation, which excludes volatile energy prices, accelerated to 0.9 percent from 0.8 percent.

Crude-oil prices have increased 3 percent over the past month just as the euro’s recent advance is adding pressure on companies to cut prices by making exports less competitive abroad.

European Inflation Jumps to 20-Month High, Bloomberg
8/2/2010 4:13:04 AM