Headline inflation in the euro zone may have risen slightly in September but, apart from higher oil prices, the region is experiencing few serious inflationary pressures, according to data published yesterday.

Germany's annual consumer price inflation stood at 0.7 per cent in September, the same rate as in August, while inflation in France rose to 0.7 per cent from 0.5 per cent, according to official statistics.

These figures, coupled with available data from other countries in the 11-nation euro zone, suggest the region's overall inflation rate rose to 1.3 per cent in September from 1.2 per cent in August, economists said. Inflation is higher in countries such as the Netherlands, Italy and Spain than in France and Germany.

The European Central Bank is confident that euro zone inflation will be below its ceiling target of 2 per cent by the end of next year, but says it sees some inflationary risks in the coming months. It is widely expected to raise interest rates soon to eliminate this threat.

Some economists say the ECB is exaggerating the risks and argue that, if the impact of higher oil prices is stripped out, much of the euro zone is virtually free of upward price pressures.

Producer price figures for the euro zone, published yesterday by the European Union's statistical agency Eurostat, appeared to bear out this view. Producer prices, which cover all industry except construction, rose by 0.3 per cent in August compared with July, after a revised 0.7 per cent month-on-month rise in July.

But that increase was accounted for by a 0.6 per cent month-on-month rise in prices for intermediate goods, which includes oil. Prices for capital and non-durable consumer goods did not rise at all in August compared with July, while prices for durable goods actually fell by 0.1 per cent.

The ECB is concerned the temporary rise in headline inflation could cause excessive wage claims when pay bargaining rounds open in Germany and other countries early next year.