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Brussels - Energy prices drove up the cost of living in the eurozone in February just as factories showed signs of a recovery, likely dragging on the stagnant economy and dampening any sense of relief that Europe’s debt crisis is easing.
Energy costs were 9.5% higher in February than the same month a year ago, breaking a fall in eurozone inflation and pushing consumer prices up to 2.7% in the month, the European Union’s statistics office Eurostat said on Wednesday.
While inflation is below last year’s peak of 3%, economists and the European Central Bank (ECB) had expected prices to fall steadily in 2012 as the eurozone slips into recession. Lower prices could have given some relief to households at a time of rising unemployment.
“Inflation is proving stickier than previously expected, predominantly driven by oil prices,” said Marco Valli, chief eurozone economist at UniCredit, in a note to clients before the data was released.
Prices rose for all goods and services except for communications and education in February, compared to January.
Tensions between the West and Iran over its nuclear programme have driven up world oil prices, even as economic growth in the global economy - notably China - cools.
Saudi Arabia and other Gulf producers have said oil prices could spike if tensions over Iran do not subside soon.
The ECB kept interest rates at 1% this month, judging that low rates are crucial to stimulating growth and that inflation seems limited for the time being.
A slight rise in industrial production in the eurozone in January - ending two consecutive monthly falls - pointed towards the bloc’s eventual recovery from recession later this year.
The devastating impact of the eurozone’s debt crisis appears to be lessening after the ECB made 1 trillion euros available to banks and EU leaders signed a pact committing governments to budget austerity, reassuring investors.
Seasonally-adjusted industrial production grew by 0.2% from December. Factories in Germany performed better, with output climbing 1.5% in the eurozone’s top economy.
But the region’s growing divide between the prosperous north and the depressed south was clear. Production fell by 2.5% in Italy and by 0.2% in Spain, the eurozone’s third- and fourth-largest economies, respectively.
Energy costs were 9.5% higher in February than the same month a year ago, breaking a fall in eurozone inflation and pushing consumer prices up to 2.7% in the month, the European Union’s statistics office Eurostat said on Wednesday.
While inflation is below last year’s peak of 3%, economists and the European Central Bank (ECB) had expected prices to fall steadily in 2012 as the eurozone slips into recession. Lower prices could have given some relief to households at a time of rising unemployment.
“Inflation is proving stickier than previously expected, predominantly driven by oil prices,” said Marco Valli, chief eurozone economist at UniCredit, in a note to clients before the data was released.
Prices rose for all goods and services except for communications and education in February, compared to January.
Tensions between the West and Iran over its nuclear programme have driven up world oil prices, even as economic growth in the global economy - notably China - cools.
Saudi Arabia and other Gulf producers have said oil prices could spike if tensions over Iran do not subside soon.
The ECB kept interest rates at 1% this month, judging that low rates are crucial to stimulating growth and that inflation seems limited for the time being.
A slight rise in industrial production in the eurozone in January - ending two consecutive monthly falls - pointed towards the bloc’s eventual recovery from recession later this year.
The devastating impact of the eurozone’s debt crisis appears to be lessening after the ECB made 1 trillion euros available to banks and EU leaders signed a pact committing governments to budget austerity, reassuring investors.
Seasonally-adjusted industrial production grew by 0.2% from December. Factories in Germany performed better, with output climbing 1.5% in the eurozone’s top economy.
But the region’s growing divide between the prosperous north and the depressed south was clear. Production fell by 2.5% in Italy and by 0.2% in Spain, the eurozone’s third- and fourth-largest economies, respectively.
