E Europe July Inflation Rates Too High For Euro-zone Entry

LONDON -- None of the eastern European candidates to join the euro zone had inflation rates low enough to do so in July, according to figures released Friday by European Union statistics agency Eurostat.

Poland and other eastern European members of the European Union have said they want to secure rapid entry into the euro zone as their currencies have come under pressure with the withdrawal of foreign capital in response to the global financial crisis.

According to E.U. rules, new entrants must have an average annual inflation rate for the previous 12 months that is no more than 1.5 percentage points above the average of the three lowest national inflation rates among E.U. members.

In June, those members were Portugal and Ireland, both with an inflation rate of 0.5%, and a group of countries including Germany with an inflation rate of 1.1%.

That means the maximum inflation rate for joining the euro zone was 2.2%, down from 2.6% in June.

However, the annual inflation rate averaged 4.0% over the 12 months to July in Poland and Hungary, while the Czech Republic's average annual inflation rate was 2.7%.

In July, consumer prices fell by 0.7% on the year in the euro zone, and 12 euro-zone members experienced deflation, or a decline in consumers prices compared with the same month of the previous year.

Other eastern European candidates are much further away from meeting the euro-zone entry criteria. In Romania, the inflation rate was 6.6%, while in Bulgaria, the inflation rate was 6.2%.

The three Baltic states also have far to go. In Latvia, the inflation rate was 8.8%, while in Lithuania it was 7.8%, and in Estonia it was 4.8%.