San Francisco Chronicle

Europe Inflation Unexpectedly Accelerated in October
San Francisco Chronicle

European inflation unexpectedly accelerated to the fastest in almost two years and unemployment was at a 12-year high as the recovery showed signs of losing momentum.

Euro-area consumer prices rose 1.9 percent in October from a year earlier after increasing 1.8 percent in September, the European Union statistics office in Luxembourg said today. That’s the fastest since November 2008 and above the 1.8 percent forecast by economists in a Bloomberg survey. The jobless rate was 10.1 percent in September, the highest since July 1998, a separate report showed.

Crude-oil prices have jumped 9.2 percent over the past two months, leaving companies and consumers with less money to spend just as a stronger euro threatens to hurt exports. With the recovery faltering and governments tackling budget deficits, companies may keep hiring plans on hold, further eroding spending.

While the euro-region economy expanded at the fastest pace in four years in the second quarter, that’s failed so far to translate into faster job creation as companies remain reluctant to boost labor costs.