“It’s a bit of a shocker,” said Gilles Moec, an economist at Bank of America who like many others had predicted a marginally lower figure of 3.9 percent for the annual inflation rate.

Eurozone interest rate futures extended falls and short-dated bond yields rose after the data.

“It’s clearly going to rattle the ECB further... It certainly plays into the hands of the hawks on the ECB Governing Council,” Moec said.

The 4.0 percent year-on-year figure for price growth in the 15-nation euro in June represented a leap from May’s 3.7 percent, moving further from the ECB’s target of just below 2 percent, European Union statistics office Eurostat said.

It was the highest inflation figure for the currency area since measurements started in 1997 and the European Commission seized on the occasion to repeat warnings against demands for big pay rises, saying that would only make matters worse.

“What is important again ... is to ensure that those inflationary expectations don’t become entrenched and to avoid at all costs a wage-price spiral, which would have very damaging consequences for our economy and citizens in general,” European Commission spokeswoman Amelia Torres said.

Analysts polled by Reuters had expected June inflation to rise to 3.9 percent, boosted by growing energy and food prices.

ECB officials have given clear signs that the bank will increase its main interest rate by 0.25 percentage point to 4.25 percent at its Governing Board’s meeting Thursday.

Nick Kounis, a senior economist at Fortis, said the central bank would probably have to raise rates more than once.

“We expect the widely expected July hike to be followed by further moves in Q4 of this year and in Q1 of next year, which would take the minimum bid rate up to 4.75 percent,” he said.

Other economists said they still expected only one hike.

“They (the ECB) probably will keep the language and bias towards a rate hike but we don’t think they will implement another one,” Juergen Michels, European economist at Citi.

The ECB wants to limit the impact of growing energy and food costs on prices in the wider economy, trying to prevent what it calls a wage price spiral.

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