Euro-zone consumer prices rose at their fastest monthly pace in nearly two years in March as the end of winter sales led to a marked increase in the price of clothes, Eurostat said yesterday. However, Ireland's inflation rate at 4.9 per cent remains the highest in the euro zone.

The monthly increase in prices was larger than expected by economists and there was also a surprise from a separate report showing euro-zone industrial production unexpectedly rose in February, the month before war began in the Gulf.

The annual inflation rate of the 12-member bloc was confirmed at 2.4 per cent, in line with an early estimate and consensus forecasts that it would stay unchanged from February.

Inflation has topped the European Central Bank's (ECB's) self-set 2 per cent ceiling for eight consecutive months.

However, at the weekend, ECB president Mr Wim Duisenberg said inflation would abate in April or May and fall below 2 per cent in the second half of 2003.

Consumers faced a 4.9 per cent monthly increase in clothing prices in March, the largest such increase since 2000, when comparable figures first became available, but Eurostat said the effect on overall prices was likely to be fleeting. - (Reuters)