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Euro-zone inflation over 3 percent for first time

EUROPE - Inflation in the 12-nation euro-zone soared to 3.4 percent in May, a surprisingly high increase that pushed the rate above 3 percent for the first time since the European single currency was launched in January 1999.

The annual inflation rate released by Eurostat compared to 2.9 percent in April and just 1.9 percent in May 2000.

The figures come at a bad time for the European Central Bank, which had been under pressure to cut interest rates to help an increasingly sluggish European economy. Cutting rates to make borrowing cheaper risks pushing inflation up still higher.

The ECB is now widely expected to leave rates unchanged when it meets on 21 June in Dublin, Ireland.

Economists say it was particularly worrying for the ECB that core inflation, which excludes energy, food, alcohol and tobacco, also rose sharply, up to 2.1 percent in May, from 1.9 percent in April.

However, analysts said there were signs inflation may have peaked in May and could be coming down this month.

Inflation across the whole 15-nation EU-stood stood at 3.1 percent in May, up from 2.6 percent in April and from 1.7 percent in May last year.

The European rates compared to inflation at 3.6 percent in the United States, Eurostat said.

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