Increased food and energy costs are raising concerns among ECB policy makers that inflation is strengthening, even as a U.S. housing slump increases risks to Europe's economic growth. ECB council member Axel Weber last week said the bank may need to raise interest rates to a level that restricts economic growth in order to keep price increases under control.
Euro area annual inflation was 2.1% in September 2007 up from 1.7% in August. A year earlier the rate was 1.7%. Monthly inflation was 0.4% in September 2007.
EU annual inflation was 2.2% in September 2007, up from 1.9% in August. A year earlier the rate was 1.9%. Monthly inflation was 0.4% in September 2007.
Inflation in the EU Member States
In September 2007, the lowest annual rates were observed in Malta (0.9%), Denmark (1.2%) and the Netherlands (1.3%), and the highest rates in Latvia (11.5%), Bulgaria (11.0%) and Estonia (7.5%). Compared with August 2007, annual inflation rose in twenty-four Member States, remained stable in one and fell in one.
The lowest 12-month averages4 up to September 2007 were in Malta (0.4%), France and Finland (both 1.4%); the highest were in Latvia (8.2%), Hungary (7.8%) and Bulgaria (6.2%).
The main components with the highest annual rates in September 2007 were education (9.1%), alcohol & tobacco (3.8%) and hotels & restaurants (3.1%), while the lowest annual rates were observed for communications (-1.6%), recreation & culture (0.2%) and clothing (0.9%). Concerning the detailed sub-indices, fuels for transport (+0.12 percentage points), restaurants & cafés (+0.10) and tobacco (+0.08) had the largest upward impacts on the headline rate, while telecommunications (-0.12), audio-visual equipment and IT equipment (-0.07 each) had the biggest downward impacts.
The main components with the highest monthly rates were clothing (6.1%), education (1.0%) and food (0.6%), and the lowest were hotels & restaurants (-1.1%), recreation & culture (-0.7%) and communications (-0.3%). In particular, garments (+0.29 percentage points) and footwear (+0.07) had the largest upward impacts, while accommodation services (-0.13) and package holidays (-0.10) had the biggest downward impacts.