ECB chief says inflation in euro-zone worrying

European Central Bank (ECB) President Jean-Claude Trichet said on Wednesday inflation in the euro-zone was "worrying."
"In the wake of renewed sharp commodities price increases, (inflation) arrived at the worrying levels of around 4.0 percent in mid 2008," Trichet told a European Parliament session in Strasbourg, France.
Due to soaring food and oil prices, inflation in the 15-nation euro-zone reached a record high of 4.0 percent in June, well above the ECB's expectation of less than 2.0 percent.
"Looking ahead, the annual rate is likely to remain well above the levels consistent with price stability for sometime, moderating only gradually in 2009," Trichet said.
He said risks to price stability over the medium term "remain clearly on the upside ... and have intensified in recent months."
"The monetary policy stance will contribute to achieving price stability over the medium term," he said, adding that the bank would continue "to monitor all developments over the period ahead."
The ECB, based in Frankfurt, raised its main interest rate last week by a quarter percentage point to 4.25 percent to contain inflation.
He also spotted signs of a spillover of wages and prices, saying "First signs are already emerging in some regions of the euro area."
Trichet warned against wage-indexation, in which wage gains are calculated on prevailing inflation rates as in Belgium and Spain, saying that this could push inflation higher.
Source:Xinhua