Euro zone inflation is expected to shoot up in September just as economic confidence is set to fall.
The scenario would be a dilemma for the European Central Bank at a time when a credit market crunch continues to put a brake on growth.
Euro zone consumer and economic sentiment indices may give further clues on the extent of the damage from market turmoil, and these
are expected to show a slight souring when figures are released by the European Commission next week.
But official inflation is forecast to jump to 2.1 per cent in September from 1.7 per cent in August according to a Reuters weekly poll of economists. This would put it above the ECB's 2 per cent ceiling for the first time in a year.
Inflation probably leapt higher as a result of base effects from last year when oil prices declined, coupled with oil prices now storming the other way. US crude has hit a record of $84.10 a barrel on Thursday and Brent is not far behind.
Economists said rising food prices such as milk and wheat would also nudge inflation higher in September. Meanwhile, economists have become even more bearish on the economic outlook for the region.