Euro-zone inflation may be more robust than the European Central Bank expected at the end of last year but this is a "temporary phenomenon" linked to high food and energy prices, ECB Executive Board member Juergen Stark told a German magazine.
"We are highly dissatisfied with the current inflation rate. But it is a temporary phenomenon, caused by a strong rise in food and energy prices," Mr Stark told WirtschaftsWochein an interview.
ECB Executive Board member Juergen Stark
"This phenomenon may be more robust than we thought at the end of the year. Over the course of the year the inflation rate should come down near the two percent mark, if the food and energy prices come down as expected."
The inflation rate in the euro zone rose to 3.2 per cent in January, the European Union's statistics office estimated last month, the highest reading since measurements for the single currency area began in January 1997.
Mr Stark urged euro-zone countries to avoid so-called second-round inflation effects through wage deals that were out of line with productivity gains, calling this "essential" for price stability.
"In recent years, wage moderation in Germany has played a decisive role in keeping wages under control in the broader euro-zone," Mr Stark said. "If we now get higher wage deals in Germany, this will have to be compensated for through lower deals in other countries."
Last week, German steel workers secured a 5.2 per cent pay increase - the largest in 16 years - and services union Verdi is pushing for an 8 per cent raise for two million public sector workers who have staged warning strikes in recent days.
Mr Stark said there was reason to believe that countries that have seen real estate market corrections amid recent financial market turbulence would see more moderate wage deals.
He was optimistic about growth in the euro bloc, saying the economy was more resilient than in 2001, when the "new economy" bubble burst.
He predicted solid growth in 2008, although below the levels of the past two years, and forecast a continued decline in unemployment.