Eurozone inflation at highest level since April 2014

Brussels: Eurozone inflation rose to a two-and-a-half-year high in November as Europe inched away from very low consumer prices that have threatened an already fragile economic recovery.

The level matched forecasts by analysts and will come as a relief to the European Central Bank which has embarked on a highly controversial and massive stimulus programme to boost inflation.

The Eurostat statistics agency on Wednesday said consumer prices in the 19-country currency bloc rose by 0.6 percent this month, the first time it has hit that level since April 2014.

The eurozone`s ultra-low inflation is a huge worry for the ECB, whose goal is to keep it near 2.0 percent.

Inflation reflects underlying consumer demand in the economy and while still edging higher this month, 0.6 percent means Europe is short of a full-fledged recovery.

ECB chief Mario Draghi said in an interview with Spain`s El Pais newspaper that the central bank continued to "steer the ship" towards that target. 

Draghi said that inflation would reach its target level by 2018 or 2019.

"The recovery -- albeit modest -- is robust. We are growing and inflation is improving," he said.

Analyst Howard Archer said that core inflation -- stripped of highly volatile food and oil prices -- still remained far too low at 0.8 percent.

"The muted November core inflation data highlight that the ECB cannot relax on the inflation front yet, even if the headline rate looks primed to rise appreciably over the next few months," Archer, of IHS Global Insight, wrote.

World oil prices have crept up in recent months, snapping a long decline that destabilised the global economy and brought a spell of deflation to Europe.

Draghi said the eurozone`s tentative recovery remained heavily reliant on the bank`s monetary boost, fuelling expectations of more stimulus to come.

"We think that the ECB has more work to do to return eurozone inflation to target on a sustained basis," said Jack Allen, European Economist at Capital Economics.

The fresh data appeared to only confirm that analysis with the ECB expected to announce an extension of its 80-billion-euro a month bond-buying programme when the governing council next meets on December 8.

The scheme, aimed at encouraging lending and investment, is currently scheduled to end in March.

Draghi cautioned that other factors clouding the euro area`s prospects included the election of Donald Trump and Britain`s Brexit vote.

"It is not yet clear what the consequences of past, current and future political uncertainty will be. There will be consequences, that much is certain," the ECB chief told El Pais.