Eurozone inflation increased in February on rising oil prices, adding to the woes of the currency-bloc that is undergoing tough economic times. The weak economic activity also forced companies to reduce staff, pushing the jobless rate to a 14-year high.
Inflation in the 17-nation bloc rose to 2.7 percent in February from 2.6 percent in January, the flash estimate from Eurostat showed Thursday. The figure was expected to remain unchanged at 2.6 percent.
Inflation continues to stay above the European Central Bank's 'below, but close to 2 percent' target. The bank maintained the main refi rate at a record low of 1 percent in February. It had reduced the rate in November and December.
A separate report showed that the unemployment rate rose to an all-time high of 10.7 percent in January from 10.6 percent in December. Economists had forecast 10.4 percent for January.
An unpalatable combination of stubborn inflation and rising unemployment at the start of the year suggest that the recent improvement in sentiment towards the economy may not last for long, Ben May at Capital Economics said. But, energy inflation will fall back slightly in coming months despite the recent increase in oil prices, the economist added.
The breakdown of consumer prices will be made available on March 14, when the statistical office publishes the final data.
For 2012 as a whole, the European Commission projects HICP inflation rate of 2.1 percent. ECB's Survey Of Professional Forecasters estimates 1.9 percent inflation in 2012, before a marginal easing to 1.7 percent for 2013.
Compared with December, the number of persons unemployed in the euro area increased by 185,000. From the same period of last year, unemployment rose 1.221 million to 16.925 million.
In the EU27, the jobless rate was 10.1 percent in January, compared with 10 percent in December.
IHS Global Insight's Chief European economist Howard Archer said data reinforces the assessment that the Eurozone is headed for further GDP contraction in the first quarter of 2012 at least, and highlight the problems facing the ECB as to whether it should trim interest rates further.
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