The annual rate of inflation in the euro zone moved up to 2.5% in May from 2% in April, according to figures released this morning by the EU's data agency Eurostat.
Confirming a preliminary estimate, it said consumer prices had risen by 0.3% in the month. In the full 25-member EU annual inflation rose to 2.4% in May, compared with 2% in April.
The rise has been widely anticipated by economists following the recent surge in oil prices. But the estimate was higher than most forecasts which had suggested a May inflation rate of 2.4%.
The figure is above the 2% medium-term target ceiling set by the European Central Bank, which was breached at the start of the year.
IIB economist Austin Hughes said the inflation rate meant the markets were now likely to focus on the risks of a rise in euro zone interest rates in late Autumn. He said he expected a rates rise before the end of 2004, adding that rates could rise relatively quickly thereafter.
