Euro zone inflation remains at 3.2%

Euro zone inflation remained at a record high in February, the European Union's statistics office estimated today.

Consumer prices in the 15 countries using the euro rose to 3.2 per cent year-on-year last month, the same as in January and in line with market consensus, Eurostat said. Some economists had expected 3.3 per cent.

The reading is the highest since measurements for the euro zone began in January 1997. The estimate does not contain a month-on-month figure or a detailed breakdown, but economists have said inflation is being driven mainly by food and energy prices.

The estimate comes ahead of the European Central Bank's rate meeting and new growth and inflation forecasts on Thursday.

The ECB wants to keep inflation just below 2 per cent but has refrained from raising interest rates to curb price growth because it believes the inflation surge is temporary, especially as economic growth is slowing.

But fast price rises are also making it difficult for the bank to cut interest rates even though the European Commission expects economic expansion to slow from 2.7 per cent in 2007 to 1.8 per cent this year, below potential growth.

The bank's fight against inflation is likely to be made easier by a strong euro, which hit record highs against the US dollar at above $1.52 on Friday, and against the British pound - the two main trading currencies for the euro zone.