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Euro zone inflation hits 4%

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Date: Monday 30 Jun 2008

LONDON (ShareCast) - Euro zone inflation rose to a record 4% year-on-year in June, adding to pressure on the European Central Bank to increase rates later this week.

The inflation rate compares to 3.7% in May and is the highest in over 16 years, according to European Union statistics office Eurostat.

Record-high energy prices near $143 a barrel and rising food prices are the main reason for the increase.

Inflation in the 15 eurozone countries is now even further away from the ECB's target of close to but less than 2%.

Economists expect the ECB to hike its main lending rate by a quarter point to 4.25% on Thursday. Last month, ECB president Jean-Claude Trichet said the bank could raise rate "by a small amount" in July.

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