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LONDON:  Inflation in the 16 countries that use the euro is steadily climbing towards the European Central Bank's target while unemployment remains stubbornly high at 10 per cent, official figures showed Friday.

In its flash inflation estimate, Eurostat, the EU's statistics office, said consumer prices in the eurozone rose by 1.7 per cent in the year to July, up from a 1.4 per cent gain in June.

The increase was in line with market expectations. Though Eurostat did not provide any reasons for the spike, most analysts said it was likely due to higher energy and food costs.

Another equivalent increase in August would take inflation above the central bank's target to keep price rises ``close to, but below 2 per cent.''

Despite the increase, the European Central Bank is not expected to raise interest rates anytime soon, especially as underlying inflation, which strips out more volatile components such as energy and food, has been fairly flat over the last few months.

Separate Eurostat figures showing the unemployment rate in the eurozone stuck at 10 per cent in June will also rein in any talk of higher interest rates. The ECB has kept its benchmark rate unchanged at 1 per cent since May 2009.

``With wage growth yet to respond fully to earlier increases in unemployment, labour market developments will put downward pressure on underlying inflation for some time yet,'' said Jennifer McKeown, senior European economist at Capital Economics.

``In all, then, we see inflation falling back below 1 per cent by the end of the year and further still in 2011,'' she added.

A more detailed look at the unemployment data showed Spain has the highest jobless in the eurozone at 20 per cent _ the figures did not include the latest Spanish snapshot, which showed unemployment at a 13-year high of 20.09 per cent.

Austria had the lowest unemployment rate of all eurozone countries at 3.9 per cent.

Eurostat said 15.77 million people were unemployed in the eurozone. That increases to 23.06 million for the 27-country EU, which also includes non-euro members such as Britain and Spain.

The unemployment rate in the EU was 9.6 per cent in June, unchanged from May.