Eurostat recently reported that, inflation in EU reached 4 percent in June 2008, up from 3.7 percent in May this year.
This is much higher than the 2 percent cordon set by European Central Bank (ECB) in order to keep prices stable.
Many leading authorities including Luxembourg Prime Minister Jean-Claude Juncker and Peer Steinbrueck, the German Finance Minister, have expressed deep concern regarding the rising inflation.
The European Trade Union Confederation (ETUC) has stressed that in the present scenario, the recent decision of the ECB to increase interest rates by 25 base points was not comprehensible.
Union explains that choking the Euro-area economy will do little to address the real causes of inflation, since high headline inflation is essentially imported from the rest of the world through high oil prices.
High Euro-area interest rates will drive the dollar further down, thereby actually giving oil prices an additional push.
Experts believe that, in the end, European economy and European workers will be the ones paying price for the ECB's decision.
Fibre2fashion News Desk - China
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