Eurozone inflation rose more than expected to 3 per cent in April as the economy reeled from the energy shock unleashed by the conflict in the Middle East.
Thursday’s preliminary estimate surpassed economists’ forecast of 2.9 per cent in a Reuters poll and followed a 2.6 per cent reading in March.
It is the second month in a row that inflation has exceeded the European Central Bank’s medium-term target of 2 per cent.
Separate data showed that Eurozone growth slowed to 0.1 per cent in the first quarter due to surging energy prices.
European stocks and government bonds were under pressure on Thursday as a surging oil price intensified fears of persistent inflation.
The 10-year German Bund yield hit its highest level since 2011 in morning trading. The 10-year yield rose as high as 3.13 per cent, before falling back to trade 0.01 percentage point higher on the day at 3.11 per cent.
The 10-year UK gilt yield, which is in touching distance of its highest level since 2008, slipped 0.01 percentage point to 5.1 per cent.
The Stoxx Europe 600 index was down 0.1 per cent.
Brent crude, the international benchmark, jumped as much as 7 per cent to $126 a barrel, the highest level since the US-Iran war began in February, as concerns mounted of a prolonged disruption to global energy supplies through the Strait of Hormuz.
The turbulence in oil markets comes as the Bank of England and ECB are set to deliver their latest decision on interest rates.
Both central banks are expected to hold interest rates steady, with officials betting they can take longer to assess whether the energy shock from the Iran war develops into a wider inflation threat.
The BoE will announce its rate decision at midday London time. Governor Andrew Bailey will hold a press conference at 12.30pm, during which investors will be looking for indications of the timing of any rate rises.
The ECB will release its decision at 1.15pm London time.
