Annual inflation in the euro zone eased as expected in February as the effect of high oil prices began to dissipate, European Union statistics office Eurostat confirmed today.
Expensive energy, however, remained the main driver behind the 2.3 per cent year-on-year increase in consumer prices last month, down from 2.4 per cent in January. Consumer prices rose 0.3 per cent month-on-month, in line with consensus estimates.
"Fuels for transport had the largest upward impact on the headline rate, followed by heating oil and gas, while garments and telecommunications had the biggest downward impacts," the statistics office said.
Energy prices grew by 0.4 per cent month-on-month and 12.5 per cent year-on-year in February, down from a 13.6 per cent year-on-year increase in January, Eurostat said.
Without the energy and unprocessed food component, prices rose 0.2 per cent month-on-month for an unchanged 1.3 per cent increase year-on-year.
This measure, which the European Central Bank calls core inflation, shows that oil prices have not yet boosted prices in other sectors.
The ECB wants to keep annual price growth below, but close to, 2 percent and is concerned about rising inflationary pressures from expensive oil and fast credit growth.
The bank raised interest rates by 25 basis points to 2.5 per cent on March 2 and economists expect it will do so twice more this year, to 3 per cent.