Brussels, March 18 (Bloomberg) -- European inflation rose to an 11-month high in February as oil and food prices jumped. Price pressures will probably ease as the economy struggles to recover, analysts said. Consumer prices in the dozen countries sharing the euro rose 0.4 percent in February, the European Union statistics office said. Prices rose 2.4 percent in the year, revised up from an earlier estimate of 2.3 percent. The European Commission yesterday cut its forecast for economic growth in 2003 to about 1 percent from 1.8 percent and said the euro's rise will keep inflation in check and provide scope for another reduction in interest rates. ``Considering that inflation is under control and growth is feeble, an adjustment in monetary policy would not trigger inflationary pressure,'' said Jean-Paul Betbeze, chief economist at Credit Lyonnais SA in Paris.
The European Central Bank pared its benchmark interest rate by a quarter point to 2.5 percent on March 6. Another quarter- point reduction would take borrowing costs in any euro country to the lowest since at least 1948. European industrial production rose 1.1 percent in January, making up some of December's 1.6 percent drop, a separate Eurostat report showed today. Brent crude prices rose 6 percent in February, helping push overall European energy prices up 1.8 percent. European consumers paid 0.4 percent more for food.
Price Pressure Eases
Inflation pressures are subsiding, according to statistics that factor out energy and food prices. The ``core'' inflation rate stayed at 1.9 percent in February, the second month it has been below 2 percent since September 2001. ``Inflationary pressure is coming down,'' Klaus Regling, head of the commission's economics department, said yesterday. He predicted a ``strong decline'' in the core rate. Crude oil today posted its biggest one-day drop since September 2001, touching three-month lows, on speculation a war in Iraq will end quickly and with limited disruption to Middle East oil supplies. Brent crude oil for May settlement fell as much as $3.08, or 10 percent, to $26.40 a barrel in London. The euro's 20 percent gain against the dollar in the past year and sputtering growth are damping price increases, the ECB has said. The central bank expects inflation to drop below 2 percent in the course of the year. Consumer prices in the 15-nation EU, which includes non-euro members Britain, Denmark and Sweden, rose 0.4 percent in February and were up 2.3 percent in the year, Eurostat said. //www.quote.bloomberg.com