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A forecast from the EU statistics agency has depicted that inflation rate in the eurozone increased by 0.5% last month.

In addition, figures delivered by Eurostat have shown that unemployment levels have remained relatively unchanged. Spain, which has the highest levels of unemployment in Europe experienced a slight increase in the number of people out of work with the level hitting 21.2% and youth unemployment rising to 46.2%. Nevertheless, the collective unemployment rate across the eurozone for those aged 25 and under decreased somewhat to 20.4%.

Although the rise in inflation rate appears very steep, analysts have explained that it is not as worrying as it seems as there has been changes made in the way price increases are calculated, and this may have contributed to the severity of the ascent.

Martin Van Vliet at ING, has stated that, over the coming months, inflation rates will begin to decrease and, although the level will remain above 2.5% for the near future, 2012 should see it decline further as a result of stablilised comodity prices.

With the rate of inflation predicted to be around 3%, it now stands at approximately 1% higher than the target set by the European Central Bank however, as the debt crisis continues and confidence in the economic condition of the eurozone remains unsound, it is unlikely that interest rates will be increased by the ECB from its current 1.5% in order to tackle the inflation levels. At the same time, the chances of a reduction in interest rates now seems equally improbable.

About The Author

Lee Murphy

MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.

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