The European Central Bank said it is focussing on the euro zone's high headline inflation rate rather than subdued core inflation readings, even though the rise in headline inflation is almost exclusively due to the recent increase in oil prices "There would be little justification for giving priority to indicators of underlying inflation over...a broadly-based analysis of the shocks driving prices," the ECB said in its November monthly bulletin Euro zone headline inflation was provisionally estimated at 2.5 pct in October, well above the ECB's target of a rate below but close to 2.0 pct But prices excluding energy and unprocessed food rose only 1.5 pct year-on-year in September, the latest month for which core inflation data are available And prices excluding energy, food, alcohol and tobacco -- Eurostat's favoured measure of core inflation -- were up just 1.3 pct But the ECB said the current low core inflation readings need to be interpreted with caution "The uncertainty with regard to the nature of current shocks impacting on inflation -- whether they are temporary or more lasting -- suggests a need for caution in interpreting the currently relatively subdued levels of some underlying inflation indicators," the ECB said It said the rise in oil prices may be the result of a long-term increase in demand from China and other emerging economies and it would therefore be misleading to focus on inflation excluding energy "An optimal assessment of medium-term inflation developments will not rely only on indicators of underlying inflation, but rather be based on a broad cross-check of all indicators with a view to identifying the nature of the shocks impacting on inflation and their likely persistence," it said An oil price shock inevitably triggers a rise in headline inflation, but it could also be expected to lead to an eventual rise in core inflation because of indirect effects and possible "second round" effects via wage increases, the ECB said Headline inflation also outstripped core inflation between the second half of 1999 and 2002, but all indicators of core inflation eventually converged upwards towards the headline rate, it said But it said the current economic environment is different to that of the 1999-2002 oil price shock in a number of ways It said that oil shock was exacerbated by a falling euro and compounded by food price rises Domestic demand and wage pressures were also stronger than they are now, and the 2002 euro cash changeover also pushed up some prices, it said