Euro zone inflation stayed well above the European Central Bank (ECB) target in December, but economists said signs of an economic slowdown would keep interest rates unchanged in 2008.
A first estimate from EU statistics office Eurostat showed on Friday that consumer prices among the countries using the euro last month rose 3.1 per cent year-on-year, the same as in November. The figure was in line with economists' forecasts.
The ECB wants to keep inflation just below 2 per cent, but a surge in oil and food prices since September has knocked it off target after a year of success.
"Today's data have highlighted the uncomfortable position that the ECB is in," said said Howard Archer, economist at Global Insight, noting that inflation was substantially above the ECB's target, while the December service sector purchasing managers' survey pointed to growth facing serious headwinds.
Activity in the euro zone's services sector, which generates some two-thirds of GDP, cooled to a 2.5-year-low in December, separate data showed on Friday.
Economists said high inflation would not allow the ECB to follow the US Federal Reserve in rate cuts to underpin growth, and that waning economic activity also precluded a rate rise.