Finance ministers of eurozone countries downplayed inflation risk in the European single currency club on Monday, despite the recent rises due to higher oil prices.
"Inflation in the euro area has been gradually moving up in the last few months, in particular because of the rise of the prices of oil, but underlining inflation pressures in the euro area have remained weak," Luxembourg Prime Minister Jean Claude Juncker told reporters after chairing a monthly meeting of eurozone finance ministers.
Official figures showed annual inflation in the 17-nation euro zone increased to 2.4 percent in January, up from 2.2 percent in December, prompting speculation that the European Central Bank ( ECB) may raise its benchmark interest rate earlier than previously anticipated.
The Frankfurt-based ECB prefers to keep the eurozone inflation close but below 2 percent to maintain price stability.
The recent rises of inflation pressure in the 17-nation euro zone were mainly due to higher oil prices on the world markets. Although inflation in the euro zone was expected to remain high in the next months, it was unlikely that the ECB would raise its rate soon.
Analysts warned rising inflation would pose a policy dilemma for the ECB since any decision to raise interest rate to contain inflation would put economic recovery at risk when the euro zone is still struggling with the sovereign debt crisis.
But eurozone finance ministers sounded optimistic about the economic situation in the euro zone.
"We considered that economic recovery is becoming more and more vigorous, and more and more self-reliant," Juncker said, adding the outlook remained encouraging.
Meanwhile, he warned that sovereign debt market was still disturbing, saying the eurozone countries were working on a comprehensive package to prevent the debt crisis from spreading further to Portugal and Spain.