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Eurozone inflation pressures at 10-month high

Euro zone inflationary pressures rose to a 10-month high in October, suggesting inflation will pick up in coming months and knocking any fears about deflation, a forward looking indicator showed today.

The Economic Cycle Research Institute's Eurozone Future Inflation Gauge (EFZIG) rose to 88.7 in October from 87.0 in September, pushed up by rising inflation pressures in Germany, France and Spain.

"With the EZFIG climbing to a ten-month high in its latest reading, deflation in the euro zone is increasingly a non-issue," ECRI said in a report.

Official euro zone inflation was at 0.6 per cent in November, signalling a return to rising prices after five straight months of falls.

The European Central Bank left its main interest rate on hold yesterday at a record low of 1.0 per cent. The central bank's staff inflation projections were edged up but was seen remaining well below the bank's 2 per cent target ceiling.

The staff projections put 2010 inflation at between 0.9 and 1.7 per cent.