European Central Bank President Jean-Claude Trichet says there is some evidence of upward pressure on inflation in the 17-country euro area.
'We see evidence of short-term upward pressure on overall inflation, mainly owing to energy prices,' said Trichet, whose main task is to maintain price stability.
He added that 'inflationary pressure over the medium term should remain contained' but that it required 'very close monitoring'.
Earlier this month, the EU's statistics agency estimated December inflation picked up to 2.2%, the first time for two years it has risen above 2%. The ECB aims to keep inflation at a level close to but below 2%.
'Looking ahead, we consider that inflation rates could temporarily increase further and be over and above the 2% level before going back to what we consider price stability towards the end of the year,' Trichet said.
KBC economist Austin Hughes said Mr Trichet's comments hinted at a significant change in ECB thinking on inflation over the past month.
He said that although there was no immediate threat of an interest rate increase, the likelihood of rates rising in the autumn had grown significantly.
Ulster Bank economist Simon Barry said there was little in the latest remarks to indicate a major risk of a rate hike in the short-term, but Mr Trichet's language signalled that the ECB was looking to give itself some flexibility.
'At some point the ECB will move rates higher from their present record lows of 1%. It doesn't appear that that trigger is going to get pulled in the next few months, but the chances of a hike by the end of this year have risen,' the economist said.
Earlier, the bank kept its main lending rate at a record low 1% for the 20th month running. Trichet said that the ECB interest rate remained 'appropriate' as the euro zone economy was 'positive' but with high uncertainty.
But he added: 'We are never pre-committed not to move interest rates. We are permanently alert.'
