Michelin Hikes Tire Prices as Raw Materials Rise

By Marcel Michelson

PARIS (Reuters) - French tyremaker Michelin (MICP.PA) kicked off a fresh round of price rises in Europe on Friday, passing on a spike in raw materials such as natural rubber, synthetic rubber, steel and oil.

The increases, to take effect between March 15 and July 1, will hit both consumers and businesses, likely adding to price inflation and possibly slowing economic growth.

The European Central Bank, which keeps a close eye on price developments, is due to discuss interest rates on March 6.

The European Commission said on Thursday that euro zone economic growth was expected to slow to 1.8 percent this year from 2.7 percent in 2007, while price inflation would remain above the 2.0 percent ECB target at 2.6 percent.

Rubber prices are up due to disappointing harvests and insatiable demand from emerging economies such as China. Other products such as grain and milk are also up and the world's largest food group, Nestle (NESN.VX), on Thursday said it would continue to raise prices to sustain profit growth.

ArcelorMittal (ISPA.AS) on Thursday announced an increase in the price of its flat carbon steel products because raw material prices had reached "unprecedented" levels.

A barrel of Brent oil trades just below $100, platinum is at record highs but car parts maker Valeo (VLOF.PA) said recently that other non-ferrous metal prices were stabilising.

Michelin, which vies with Japan's Bridgestone (5108.T) for the title of the world's biggest tire group, said the price for tyres for passenger cars and vans would rise 3.5 percent.