Annual euro-zone inflation slowed unexpectedly in August to 1.7% - below a previously released flash estimate of 1.8% and below economists' expectations. It is the 12th straight month that inflation has come in below the European Central Bank's target of "close to, but below" 2.0% - but economists say it is unlikely to stay that way, with inflation likely picking up in the coming months, probably accelerating above target in September. "This is probably as good as it gets on the inflation front," said Martin van Vliet, economist at ING Bank, "Elevated oil prices and less favorable base effects will drive energy price inflation higher in the coming months and will push the headline rate back towards 2%. In addition, ECB officials continue to fret about the upside risks to inflation further out." The annual rate of consumer price inflation in the 13 countries which share the euro was 1.7% in August, curbed by smaller energy price increases. The monthly rate was 0.1%. Economists had expected the rate to be 0.1% on the month and 1.8% on the year. The ECB left its key interest rate on hold at its September monthly policy meeting but economists said it's increasingly concerned about upside risks stemming from increased capacity utilization, companies' pricing power, a tightening labor market, elevated oil prices and excessively strong money supply. The bank has increased the rate eight times since December 2005, to 4.0% from 2.0%, in a bid to contain inflationary pressures in the economy. The yearly rate of core inflation, which excludes energy, food, alcohol and tobacco, remained steady at 1.9% in August for the sixth month in a row. Its monthly rate was 0.2%. Excluding only tobacco prices, the yearly rate of inflation was 1.7% and the monthly rate was flat. Despite the marked surge in global agricultural prices, the rate of food inflation remained stable in August at 2.1% on the year, compared with 2.0% in July. On the month, prices of clothing registered a 0.7% rise, while hotel and restaurant costs rose 0.4%. The biggest monthly drops were in the health, transport and recreation subcategories, where inflation slowed 0.4%, 0.5% and 0.1% respectively.