European inflation accelerated to the fastest in 2.5 years in April, increasing pressure on the European Central Bank to raise borrowing costs further.

Consumer-price growth in the 17-nation euro region quickened to 2.8 per cent from 2.7 per cent in March, the European Union's statistics office in Luxembourg said today. That's in line with an initial estimate on April 29th and the fastest since October 2008. Euro-area exports rose a seasonally adjusted 1.1 per cent in March from February, a separate report showed.

The euro-region economy expanded at a faster pace than economists forecast in the first quarter, giving companies room to pass on surging commodity costs.

"Inflation data and the strong euro-zone gross domestic product growth increase the risk that the ECB could tighten interest rates more aggressively," said Howard Archer, chief European economist at IHS Global Insight in London. "July remains the most likely choice for the next ECB rate hike."

ECB president Jean-Claude Trichet has said it is important to remain "extremely alert" on price developments after policy makers last month raised the benchmark interest rate by 25 basis points to 1.25 per cent, the first increase in almost three years.

The euro was little changed after the data were released, trading at $1.4113 this morning in Brussels.

The European Commission on May 13th raised its inflation forecast for this year to 2.6 per cent from a previously projected 2.2 per cent. In 2012, annual consumer-price growth may slow to 1.8 per cent, the Brussels-based commission said. That's above the ECB's March projection of 2.3 per cent and 1.7 per cent, respectively.

Euro-region core inflation, which excludes volatile items such as food and energy, accelerated to 1.6 per cent in April from 1.3 per cent in the previous month, the statistics office said. That's the fastest since April 2009.

Crude oil prices have increased 7.9 per cent this year, breaching $100 a barrel in February for the first time in more than two years. Crude was at $98.46 a barrel at 10.14am in Brussels.

Bloomberg