Euro-zone inflation crept up slightly in August, as higher energy and food prices trickled down to raise the cost of consumer goods.
Initial estimates released by EU statistical agency, Eurostat, show that annual inflation across the 12-member euro zone rose to 2.1 per cent in August, up from 1.9 per cent in July.
The August number, which has come in at the high end of analysts' expectations, is above the European Central Bank's targeted ceiling of 2 per cent.
"The figures are a bit disappointing," said Mr Austin Hughes, chief economist with IIB Bank.
Mr Hughes said the data left the European Central Bank in an "awkward position" on interest rates, as the bank balances deflationary influences from the US with inflationary trends and slow growth at home.
The inflation figure, a "flash estimate", is based on early price information from Belgium, Italy and Germany as well as early information on energy prices.
No detailed breakdown is available, but the annual rise is likely to have its roots in higher oil and fresh-food prices, the latter owing much to sustained poor weather.
Both factors are expected to continue to weigh on the euro-zone economy over the coming months.
The estimated August increase, the second consecutive annual rise in euro-zone inflation, will make monetary hawks very reluctant to countenance the prospect of cutting rates, according to Mr Hughes.
"It will be very difficult for the ECB to contemplate cutting interest rates unless there's a catastrophic deterioration in economic circumstances. The best hope is that they'll leave them where they are," he said.
Ms Geraldine Concagh, economist with AIB Capital Markets, agreed that the data would probably push the ECB to keep rates steady for the next few months.
"Although growth in the euro zone is very sluggish, their primary concern will be inflation," she said.
The most recent inflation statistics available for the Republic point to a domestic rate of 4.2 per cent.
Ms Concagh is forecasting a euro-zone inflation rate of 2.2 per cent for the year as a whole.
Meanwhile, the European Commission said yesterday that the August rate was in line with expectations and that inflation prospects for the euro zone were positive.
"The general inflation situation and prospects are a good one," said a Commission spokesman. - (Additional reporting by Reuters)
