Eurozone 1 annual inflation 2 is expected to be 4.0% in June 2008 - the highest since May 1992, according to a flash estimate issued by Eurostat, the Statistical Office of the European Union. It was 3.7% in May.
The target inflation rate of the European Central Bank is "below but close to" 2% and in early June, Jean-Claude Trichet, the President of the ECB signalled that the Bank will rise its benchmark rate to 4.25% to reinforce the importance of countering a rise in inflation expectations.
Computation of flash estimates
Eurozone inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available 3 as well as early information about energy prices.
The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the Eurozone . No detailed breakdown is available. Experience has shown the procedure to be reliable (14 times exactly anticipating the inflation rate and 10 times differing by 0.1 over the last two years).
1. The Member States of the euro area are Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia and Finland.
2. Annual inflation is the price change between the current month and the same month of the previous year.
3. The MUICP flash estimate usually includes early price information representing approximately 95% of the euro area total consumption expenditure weight (see News Release 53/2006 of 28 April 2006).
