Eurozone inflation defied expectations of a small decline and rose in March, an estimate showed on Thursday, a week before the European Central Bank is expected to raise interest rates to stem price growth. The European Union's statistics office Eurostat estimated that consumer prices in the 17 countries using the euro jumped 2.6 percent year-on-year in March, up from 2.4 percent in February. Economists polled by Reuters had expected 2.3 percent.
"The fact that euro zone consumer price inflation rose more than expected to 2.6 percent... effectively rubber stamps an ECB interest rate hike from 1.00 to 1.25 percent at its 7 April meeting," sad Howard Archer, economist at IHS Global Insight. "The ECB is determined to send out the message that it will be tough on inflation despite the still difficult economic situations in many euro zone countries and the global economic uncertainties resulting from events in Japan and the Middle East and North Africa."
Central bank policymakers, tasked with keeping inflation below, but close to 2 percent, signalled in early March that they could raise its main refinancing rate in April in reaction to the fast rise of commodity prices. The Eurostat estimate does not contain a monthly figure or a more detailed breakdown, but rising prices of oil and clothes were likely behind the increase, economists said.
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