Eurozone Inflation Rises Unexpectedly

(RTTNews) - Eurozone inflation increased unexpectedly in February even before the conflict in the Middle East began, official data showed on Tuesday.

The harmonized index of consumer prices rose 1.9 percent from a year ago, the flash estimate revealed. This followed January's 1.7 percent increase and December's 2.0 percent rise. Prices were expected to climb at a steady pace of 1.7 percent.

Excluding energy, food, alcohol and tobacco, core inflation climbed to 2.4 percent in February, while it was expected to remain stable at 2.2 percent. Final data for February is due on March 18.

ING economist Bert Colijn said the jump in core inflation indicates that prices pressures have not fully eased in the euro area.

"Clearly, the energy supply impact of the Middle East war brings upside risk to the inflation outlook, which puts the ECB on high alert," he added.

"The longer the conflict goes on, the more impactful this will be for eurozone inflation and economic growth," the economist said.

The European Central Bank had kept its interest rate unchanged over the last five policy sessions. The deposit rate currently stands at 2 percent.

Data today showed that services prices registered the highest annual growth of 3.4 percent, followed by 2.6 percent rise in food, alcohol and tobacco prices. Non-energy industrial goods prices gained 0.7 percent, while energy prices dropped 3.2 percent.