Euro zone October consumer prices rose 2.3 per cent from a year ago and posted a larger-than-expectedmonthly increase of 0.3 per cent, data showed today.
The inflation rate was the highest since April 2002 andsurpassed the European Central Bank's self-imposed 2 per cent ceiling for the third month running, Eurostat said.
But analysts said market expectations of an interest ratecut would remain intact, given that the European Central Bank said last week a sluggish economy and a stronger euro should dampen inflation in the medium term.
The increase in headline inflation came as energy pricesposted their first annual increase since September 2001, rising by 2.3 per cent.
"The rise in energy prices was perhaps a bit larger than weexpected but it [the upward revision to headline inflation] is due to a rounding effect and nothing special," an official at the European Union statistics office said.
The data compared with economists' expectations thatheadline consumer prices prices would rise by 0.2 per cent on a monthly basis and by 2.2 per cent year-on-year.