European inflation at a 16-year high

The inflation rate in the euro zone is now 3.7 percent which is the highest since June 1992, the rate was estimated to be 3.6 percent only a month ago.

Inflationary pressures are hitting as a result of the surge in food and energy costs, most notably in the eastern European countries, as they are realigning with the rest of the euro zone, in a situation that has been described by finance ministers across the world as an ever more complicated dilemma.

Inflation in Hungary rose higher than expected at 7 percent whilst Slovakia is running at a 20-month high.

The situation has been made more complex by the fact that inflation has now become a worldwide phenomena, as rising commodity prices are lifting consumer prices, and therefore, making it harder for monetary policy changes to take any effect or grip on the global slowdown itself.

It has been debated widely that with inflation accelerating, it becomes increasingly difficult to see anything but an increase in rates from the European Central Bank (ECB), as the euro was up 0.7 percent to $1.5490 against the dollar, closing at $1.5498 last week.

There is a widespread concern that consumers and companies will balance the books as a result of higher costs, by pushing up salaries and their own prices, which in turn will fuel inflation further.

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