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Europe Price Pressures Up

BANGALORE - Inflationary pressures in the euro zone touched a 16-month high in March marking a clear cyclical upturn in prices, according to a forward looking indicator from the Economic Cycle Research Institute.

New York-based ECRI said its Eurozone Future Inflation Gauge (EFZIG) rose to 91.9 in March from 90.7 in February, pushed up by rising inflationary pressures in Germany, France and Spain but partially offset by declining pressures in Italy.

"According to the EZFIG, underlying inflation pressures are still mounting, even as economic growth prospects remain lacklustre at best, and despite expectations in some quarters that the European Central Bank will be forced to further ease monetary policy," said ECRI's Lakshman Achuthan.

Data due next week is expected to show the 16-nation currency bloc grew by a mere 0.2 percent in the first quarter of this year, after stagnating in the previous quarter.

The central bank on Thursday left rates on hold at a record low of 1.0 percent for a 12th consecutive month.

Flash figures released last week showed inflation edged up slightly to 1.5 percent in April, still way below the ECB's 2 percent target ceiling.