Euro zone inflation rose as expected in January, and retail sales for December came in above consensus, data showed today.
The European Union's statistics office estimated consumer prices grew by 2.4 per cent year-on-year last month, up from 2.2 per cent in December and in line with market consensus. Eurostat's month-on-month figure and other details are due on February 28th.
The figures strengthen the case for a European Central Bank interest (ECB) rate rise next month.
The ECB, which wants to keep inflation just under 2 per cent, decided to leave interest rates unchanged yesterday but signalled a readiness to raise them because of rising inflationary risks from energy prices as the economy picks up.
Economists expect the bank will raise the cost of borrowing in the euro zone by 25 basis points to 2.5 per cent on March 2nd, and then possibly once or twice more this year.
The ECB said yesterday there was a risk inflation would be higher than expected if there are further oil price rises, or if oil costs boost consumer prices more than expected now.
A further inflationary impulse could come from additional increases in administered prices and indirect taxes, and potential second-round effects on wage and price-setting behaviour, the ECB said.
