German inflation accelerated slightly quicker than expected this month, official figures showed on Wednesday, raising the prospect of a moderate increase in price pressures in the 13-nation eurozone.
Germany's European Union-harmonised annual inflation (HICP) quickened to 2.1 percent in March from 1.9 percent in February, the Federal Statistics Office said. The Reuters consensus forecast had been for a reading of 2.0 percent.
The data, which offer the first hint of price trends in the euro area, suggested inflation in the currency zone had probably quickened slightly from 1.8 percent in February. Germany accounts for just under one third of the zone's price index.
Economists noted that while this would keep inflation close to the European Central Bank's target rate of just below two percent, an acceleration in money supply growth in February meant the bank was likely to keep raising interest rates. The EU's statistics arm Eurostat is due to publish a preliminary March inflation estimate at 0900 GMT on Friday.
Euro zone M3 money supply grew at a 10 percent annual rate last month, official figures from the ECB showed on Wednesday. This was the fastest rate since February 1990.
The Federal Statistics Office is due to publish final March inflation figures for Germany on April 16. Adolf Rosenstock, an economist at Gebser & Partner Asset Management, said the German figures meant eurozone inflation would probably quicken to 2.0 percent at most.
"The (ECB) will be more worried about the M3 figures - I'm sure they'd rather have seen a slowdown in credit growth. With the latest credit growth there's been, the ECB will see more and more reasons to take interest rates beyond 4 percent," he said.
Markets are expecting the ECB to raise its main lending rate to 4.0 percent from 3.75 percent at present in coming months, and a number of analysts this week said they would not be surprised if the bank went even further before the end of 2007.
Speaking in Madrid on Wednesday, ECB executive board member Jose Manuel Gonzalez-Paramo said eurozone and world growth was robust, but that there were medium-term inflation risks.
DZ Bank economist Bernd Weidensteiner said the recent rally in oil prices risked boosting inflationary pressures in the weeks ahead, but added that base effects could keep euro zone inflation relatively contained next month as well.
A breakdown of the German figures showed prices of fuels, clothing and shoes rose appreciably on the month in March, while seasonal foods and package holidays were cheaper.