BRUSSELS, March 3: Inflation in the 15 nations sharing the euro held steady in February at a record 3.2 per cent, the Eurostat data agency said on Monday.

The data, which was in line with economist forecasts, marked the second month in a row that inflation has run at the highest level since the eurozone was formed in 1999.

The figures, which came amid record oil prices of more than $100 a barrel, were also far above the European Central Bank’s comfort zone of just under 2.0 per cent.

The ECB has repeatedly sounded the alarm recently about inflation threats as the Frankfurt-based central bank faces a growing dilemma of keeping a lid on prices without endangering increasingly weak economic activity.

German central bank governor Axel Weber, an influential member of the ECB’s governing council, threw cold water last week on market expectations for a interest rate cut in coming months, warning about inflation threats.

Despite the record headline figure, underlying inflation, when volatile energy and food prices are stripped out, probably remains under control although there is a danger that could change, economists said.

Inflation was clearly pushed up once again in February by elevated energy and food prices, said economist Howard Archer with consultants Global Insight.

Nevertheless, the ECB will remain worried that the longer that headline inflation stays above 3.0 per cent, the greater the risk will be that this will feed through to have second round effects, he added.

Although economists see inflation rising in the coming months, expectations remained for the ECB to cut interest rates later this year, although perhaps not as soon as previously expected.

Looking forward we believe that inflation could still edge higher in the coming months, to 3.3 per cent, said economist Sunil Kapadia at investment bank UBS.

We do not currently expect the ECB to be spurred into hiking because of high current inflation rates.

Instead, the ECB, in our view, will likely respond to slowing (economic) activity and the risks of a sharper slowdown by cutting rates by 100 basis points (one percentage point) this year, he added.

Economists widely expect the ECB to leave its main interest rate unchanged at 4.00 per cent at its next monetary policy meeting on Thursday.—AFP