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Euro Zone Inflation Pressures Surge


Euro zone inflation pressures surged to their highest in nearly eight years in March, suggesting that inflation will remain at elevated levels in coming months, a report by the New York-based Economic Cycle Research Institute showed on Friday.

The Eurozone Future Inflation Gauge, which aims to predict future trends in the region's inflation, rose to 110.2 in March from 109.6 in February, the report showed.

The report showed that German inflationary pressures jumped past February's 17-year high in March and slipped back to December's 16-year high in France. In Italy pressure stayed near January's 20-month high, while in Spain they fell.

"The EZFIG advanced to its highest reading in nearly eight years, indicating that euro zone inflation pressures are still on the rise," ECRI said in the report.

Euro zone inflation cooled more than expected in April to 3.3 percent from a record high of 3.6 percent the previous month.

This is still well above the European Central Bank's 2.0 percent ceiling and will likely mean interest rates are left at 4.0 percent for at least the next few months.

Surging oil and food prices over the past month could well see inflation rise again in May, while most economists forecast it to average around 3.0 percent in 2008.