Inflation in Euro Zone Soars to 3.4% in May

Associated Press

Inflation in the 12-nation euro zone soared to annual rate of 3.4% in May, a surprisingly high increase that pushed the rate above 3% for the first time since the European single currency was launched in January 1999.

The annual inflation rate released by Eurostat contrasted with 2.9% in April and 1.9% in May 2000.

The figures come at a bad time for the European Central Bank, which had been under pressure to cut interest rates to help an increasingly sluggish European economy.

The ECB is now widely expected to leave rates unchanged when it meets Thursday in Dublin.

Gerassimos Thomas, spokesman for the European Commission, said the EU's executive office now thinks it unlikely euro-zone inflation can be brought below 2% before the end of this year, although he remained hopeful it would be back on track early in 2002.

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