Inflation in the euro zone rose to just under 3 per cent in April, a five-month high as prices increased across the board.

The news put the European Central Bank on the defensive following last week's interest rate cut when it stated that inflation was not a problem over the medium term.

Three ECB council members poured cold water on hopes for any further reduction soon, saying medium-term price stability was the bank's main concern.

The euro zone's harmonised index of consumer prices rose to 2.9 per cent year-on-year, a five month high, from 2.6 per cent in March as food prices jumped, on the back of scares over mad cow and foot-and-mouth diseases and high fuel prices. But the core rate, which excludes sectors with volatile prices, also rose by 0.1 percentage points to 1.9 per cent.

Inflation is high across the zone. Inflation was highest in the Netherlands, at 5.3 per cent. France saw some of the sharpest rises, with an 0.6 percentage point increase on the month to 2 per cent. Irish inflation was running at 4.3 per cent. Even Italian data were very high at 3.1 per cent, the highest since August 1996.

Mr Ernst Welteke, Bundesbank president and member of the ECB's governing council, indicated that last week's surprise rate cut was not meant as a signal that more easing was in the pipeline. Asked by reporters whether last Thursday's ECB move, which trimmed rates to 4.5 per cent, was an appetiser, Mr Welteke said: "No." He added that keeping rates on hold would have stirred up rate cut speculation.