BRUSSELS, July 31: Euro zone inflation surged to another record high at 4.1 per cent year-on-year in July, data showed on Thursday, although a bleak economic outlook may discourage a further official interest rate rise this year.

Price growth in the 15-nation euro area accelerated from June’s 4.0 per cent, moving further above the European Central Bank’s target of just below two per cent, European Union statistics office Eurostat said in its flash estimate for July.

It was the highest inflation figure for the currency area since measurements started in 1997. Analysts polled by Reuters had predicted the rise.

Belgium, Germany, Italy and Spain all reported record high national inflation levels as global demand for commodities drives up energy and staple food prices. Pasta in Italy now costs 25 per cent more than it did in July 2007.

But oil prices on the global market have fallen in recent weeks, which could eventually help consumers, analysts said.

Eurostat revised up the jobless rate for May to 7.3 per cent from a previous reading of 7.2 per cent, and said the figure held stable in June. Economists had expected June unemployment to come in at 7.2 per cent.

The economy is burdened by a strong euro, soaring prices of food and energy, tight credit conditions and an increasingly visible slowdown in other major industrialised countries.

Financial markets awaited the 1230 GMT release of US gross domestic product (GDP) data which includes an inflation gauge closed watched by the US Federal Reserve, the core personal consumption expenditures (PCE) measure.

That is expected to fall to 2.20 per cent for the second quarter from 2.30 per cent .

Economists said while the high euro zone inflation figure could revive talk about another ECB rate rise this year, the most likely scenario was for the bank to refrain from a hike.—Reuters