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Eurozone inflation edges higher
BRUSSELS, Belgium -- Eurozone inflation reached its highest level in six months in October as higher energy costs helped push up prices more than expected. But there are signs that price pressure will begin easing next year if the European Central Bank starts lowering interest rates soon in an effort to lift the sluggish economy. The annual rate of inflation in the 12-nation zone increased to 2.3 percent last month, compared to a 2.2 percent rise in September, the European Statistics office said on Monday. The October rise was the biggest since April, when it jumped 2.4 percent, and also marked the third month in a row that inflation topped the ECB's target ceiling of 2 percent. The 0.3 percent monthly increase in consumer prices was larger than economists had expected. Most had forecast a rise of 0.2 percent on a monthly basis and 2.2 percent year-on-year. But the European Commission said price pressures would decline next year as it predicted eurozone inflation would fall below the ECB's ceiling in the first half of 2003. "We expect inflation ... to start coming down early next year," Gerassimos Thomas, the Commission's spokesman on economic and monetary affairs, told reporters in Brussels. The rise in monthly inflation came as energy prices posted their first annual rise since September 2001, climbing by 2.3 percent. National inflation rates ranged from Ireland's 4.4 percent to Germany's 1.3 percent. Germany -- the eurozone's biggest economy -- had one of the biggest falls, dropping from 2 percent in September. "There does seem to be a divergence between certain countries. We don't like it too much but I don't think today's figures have revealed that as something new,'' The Commission's Thomas told Reuters. The Commission said last week such gaps in national inflation rates made the work of monetary policymakers more difficult, but it insisted the low level of inflation in some member states did not justify deflation fears.
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