Eurozone Inflation Hits New Record of 8.6%

Annual inflation in the euro zone rose to an all-time high in June, hitting a new record high of 8.6%, according to a preliminary estimate from the European Union's statistics office on Friday.

The increase, which is also higher than the 8.1% reading in May for the headline consumer price index (CPI) and above analysts' estimates of 8.4%, was mainly driven by higher energy and food prices.

The CPI rose to 4.6% in June from 4.4% in the previous month. On a monthly basis, the CPI in the Eurozone settled in June at 0.8%.

Meanwhile, data on Friday showed that price growth in Italy also rose to a record high in June, reaching 8.5% compared to 7.3% in May.

France and Spain also recorded new highs earlier this week. Germany was beyond that, with prices dropping unexpectedly on a monthly basis.

The latest inflation data comes as the European Central Bank (ECB) looks set to raise interest rates this month for the first time in 11 years in a bid to curb high rates.

ECB indicated that it would also raise borrowing costs in September, but said the size of the move would depend on incoming data. However, there are still concerns that aggressive policy actions by the central bank could lead to a broader slowdown.

The bank is also moving to address concerns about a potential explosion in the gap between sovereign debt yields in peripheral countries such as Italy and Spain, and larger economies, especially Germany.

The euro was trading slightly lower against the US dollar, down 0.20% at 1.0462.