Inflation in the euro area against all odds accelerated in March, Eurostat reported Thursday, one week a meeting of the Governing Council of the European Central Bank (ECB) would probably raise rates interest.
According to estimates published by the European statistics agency, prices rose 2.6% annual rate in the 17 countries using the euro, against 2.3% expected and 2.4% in February .
"The fact that price inflation in the euro area rose more than expected to 2.6% (…) in fact endorses a higher interest rate on the ECB by 1.0% to 1, 25% at the meeting of 7 April, "said Howard Archer, economist at IHS Global Insight.
"The ECB is determined to send the message it will be tough on inflation despite the continuing difficult economic situations in many countries in the euro area and global economic uncertainties due to the events in Japan, the Middle East and North Africa. "
The European Central Bank, which wants to contain rising prices at a level below but close to 2.0%, suggesting for weeks that she could fall in April its refinancing rate in response to rising commodity prices .
OTHER RATE INCREASES EXPECTED
However, economists expect that the prices remain above target for the central bank in 2011 and markets expect the increase in April will be the first in a series of increases that year.
"We anticipate a rate hike of 25 basis points in the second quarter, followed by two further increases during the remainder of the year to raise rates to 1.75% at the end of the year," said Daniele Antonucci (Morgan Stanley).
The estimate published by Eurostat has no detailed figures or monthly basis, but economists believe that rising oil prices and clothing is probably the cause of rising prices.
"A base effect largely positive energy and (date) late Easter would have allowed to contain, at least in part, the strong upward pressures related to soaring oil prices," noted Chiara Corsa, economist at Unicredit.
"However, garments and footwear may have contributed to the figure upward, with the new methodology introduced earlier this year."