Inflation in euro nations was 1.7 percent in August, the EU's statistical agency said Friday, revising downward its earlier estimate of 1.8 percent for the month, reported ap. Higher prices for restaurants and cafes, tobacco and education were the main factors pushing up inflation from a year ago, Eurostat said. Inflation was 1.8 percent in July and 1.9 percent in June _ beneath the European Central Bank's guideline of just under 2 percent that it looks to when it decides whether to raise the cost of borrowing to cool overheating prices. The euro area's relatively low inflation rate has, in recent months, been influenced by falling energy prices after an oil price spike that has masked higher prices for food _ particularly key groceries such as milk and wheat. Germany, the EU's largest economy, saw inflation of 2 percent. In the euro zone, Slovenia racked up the fastest rate of price increases, with inflation of 3.4 percent, ahead of Greece on 2.7 percent and Ireland on 2.3 percent. The lowest rates were seen in the Netherlands with a provisional figure of 1.1 percent, Belgium on 1.2 percent and France on 1.3 percent. In the entire 27-nation European Union, inflation was 1.9 percent, ranging from 0.6 percent in tiny Malta to 10.6 percent in the fast-growing Baltic state of Latvia. Europe has so far managed to enjoy high growth and low prices but that may be coming to an end. The European Commission on Tuesday raised its forecast for inflation for the whole of the year, up 0.1 percentage points to 2 percent. It also warned that it was more unsure of how well the euro economy would continue to grow the rest of this year following a credit crisis triggered by problems in the U.S. housing market that has raised borrowing costs and made a global slowdown more likely.
