'Worrying' Eurozone inflation likely to stay high

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STRASBOURG, July 9 (AFP): Inflation in the 15 countries sharing the euro-at the "worrying" level of 4.0 per cent in June-risks staying high in the months ahead, European Central Bank (ECB) President Jean-Claude Trichet warned today.

"In the wake of renewed sharp commodities price increases, (inflation) arrived at the worrying levels of around 4.0 per cent in mid 2008," Trichet told the European Parliament in Strasbourg.

"Looking ahead, the annual (inflation) rate is likely to remain well above the levels consistent with price stability for sometime, moderating only gradually in 2009.

"Risks to price stability over the medium term remain clearly on the upside ... and have intensified in recent months," he added.

Driven ever higher by soaring oil and food prices, inflation in the eurozone hit a record 4.0 per cent in June, more than double the ECB's comfort level of close to but less than 2.0 per cent.

Ever determined to fight inflation, the Frankfurt-based central bank raised its main interest rate last Thursday by a quarter percentage point to 4.25 per cent despite Eurozone's weakening economic outlook.

"The monetary policy stance will contribute to achieving price stability over the medium term," Trichet said. "We will continue to monitor all developments over the period ahead."