EUROPEAN UNION - ECONOMY

Brussels raises EU inflation estimate

1 min

The European Commission released its Spring forecast for the EU's economy, raising its 2008 inflation estimate to 3.2%, up from 2.6% two months ago, due to record oil and food prices.

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The European Commission sharply raised its 2008 inflation estimate for the eurozone to 3.2 percent while trimming back only slightly its growth forecast to 1.7 percent.

In February, the European Union's executive arm had forecast that inflation in the 15 nations sharing the euro would reach 2.6 percent this year and that growth would be 1.8 percent.

While record oil and food prices were taking their toll on growth and inflation, financial market turmoil and a US slump were proving to be worse than previously expected, the commission said in its spring Economic Forecast.

In the 27-nation European Union, the commission forecast inflation would reach 3.6 percent, this year instead of the 2.9 percent previously expected, but stuck to its estimate for 2.0 percent economic growth.

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