Higher prices for transport fuel, heating, dairy products and bread pushed inflation in the euro currency zone to a new high of 3.3 percent in February, the EU statistics office Eurostat said Friday, according to AP. Soaring inflation _ the highest since the 1999 introduction of the euro _ puts pressure on the European Central Bank and finance ministers of the 15 nations that use the euro to curb racing costs for basic goods. Worried about tight credit conditions, the ECB has so far held off raising interest rates that would help cool inflation _ now well above its recommended guideline of just under 2 percent. Instead, it has called on others to avoid a price spiral, telling unions and governments to avoid big pay increases. Separate Eurostat figures showed hourly labor costs in the euro area increasing above analyst expectations. Labor costs in the final three months of 2007 rose 2.7 percent, just ahead of the 2.6 percent forecast by economists surveyed by Dow Jones Newswires. Worse may lie ahead. German steel workers recently won a 5.2 percent pay increase, and unions are angry at the ECB's call for wage moderation, saying they deserve some of the rewards of the recent economic boom that enriched companies _ even though growth is now slowing. Price increases risk hurting the economy because they discourage shoppers from making bigger purchases. Consumer confidence _ one of the main drivers of economic growth _ froze last month. Eurostat on Friday revised upward a first estimate of 3.2 percent annual inflation for the month, the same figure for January. Inflation in the EU's largest economy, Germany, was 2.9 percent. The Netherlands _ at 2 percent _ was the only country with a lower figure. Cooler inflation in Germany and in France _ at 3.2 percent _ is well below the rapid rises in some of the smaller euro nations. Slovenia tops the scale at 6.4 percent, with Greece at 4.5 percent and Spain _ hit by a slowing housing market _ was at 4.4 percent. Fast-growing eastern European states saw huge surges, a trend that will make it difficult for them to join the euro soon. Latvia's inflation rate was a massive 16.5 percent, Bulgaria was 12.2 percent and Estonia 11.5 percent. Eurostat had some comfort for shoppers, saying prices for telecoms, cars and clothes have fallen from a year ago.
