Eurostat on Friday revised the figure up from a previous estimate of 3.2% for the 15-nation single currency zone, itself a joint record high at the time. A consensus forecast of economists consulted by Reuters had predicted the rate would stay unchanged from 3.2%.

Compared with January, prices rose 0.3%, Eurostat said in a statement, in line with the consensus forecast. Energy prices jumped 10.4% in February from the same month last year. The food and transport components – both sensitive to high oil prices — grew by 5.8 and 5.4% respectively. Without the volatile unprocessed food and energy costs, or what the European Central Bank calls core inflation, prices grew by 2.4% year-on-year and 0.5% month-on-month.

The ECB, which wants annual inflation to be just below 2%, watches the core inflation measure carefully for signs of high oil prices filtering through to other sectors of the economy. The bank has left interest rates unchanged at 4.0% because of signs of an economic slowdown, which could ease pressure on prices later this year. In the whole European Union of 27 countries, inflation in February was 3.4% year-on-year and 0.4% month-on-month.

Also on Friday, Eurostat said labour costs in the Q4 of 2007 rose by an annual 2.7%, picking up speed from the previous three months when costs rose 2.5%. Wages and salaries grew by 2.9% while non-wage costs were up 2.2%, Eurostat said. ECB officials and EU finance ministers have called for wage restraint despite the pick-up in inflation, saying salary growth could hinder efforts to boost European competitiveness. (Reuters)