Euro Zone Feb Inflation Hits Record High 3.3%

Euro zone inflation hit a new record high of 3.3 percent in February, the European Union's statistics office said, with soaring oil prices taking their toll despite the cushion of a strong euro.

Eurostat on Friday revised the figure up from a previous estimate of 3.2 percent for the 15-nation single currency zone, itself a joint record high at the time.

A consensus forecast of economists consulted by Reuters had predicted the rate would stay unchanged from 3.2 percent.

Compared with January, prices rose 0.3 percent, Eurostat said in a statement, in line with the consensus forecast.

Energy prices jumped 10.4 percent in February from the same month last year. The food and transport components -- both sensitive to high oil prices – grew by 5.8 and 5.4 percent respectively.

Without the volatile unprocessed food and energy costs, or what the European Central Bank calls core inflation, prices grew by 2.4 percent year-on-year and 0.5 percent month-on-month.

The ECB, which wants annual inflation to be just below 2 percent, watches the core inflation measure carefully for signs of high oil prices filtering through to other sectors of the economy.

The bank has left interest rates unchanged at 4.0 percent because of signs of an economic slowdown, which could ease pressure on prices later this year.

In the whole European Union of 27 countries, inflation in February was 3.4 percent year-on-year and 0.4 percent month-on-month.

Also on Friday, Eurostat said labour costs in the fourth quarter of 2007 rose by an annual 2.7 percent, picking up speed from the previous three months when costs rose 2.5 percent.

Wages and salaries grew by 2.9 percent while non-wage costs were up 2.2 percent, Eurostat said.

ECB officials and EU finance ministers have called for wage restraint despite the pick-up in inflation, saying salary growth could hinder efforts to boost European competitiveness.