Inflation in the euro zone is likely to decline later this year but to go up again in 2001 as price pressures build up across the economy, the European Central Bank said yesterday.

In its monthly report for March, the ECB said the euro zone was expected to record annual economic growth of more than 3 per cent this year and a similar rate in 2001.

Unemployment, which stood at 9.6 per cent of the workforce in January, is expected to average 9.5 per cent this year but to fall to less than 9 per cent in 2001, the ECB said.

Quoting forecasts from independent experts, the ECB said annual inflation was expected to remain below its target ceiling of 2 per cent this year and next.