A slide in oil prices lead inflation in the 15-member eurozone to drop below 4 per cent in August, data to be released Friday is forecast to show, as a result helping to ease the pressure on the European Central Bank.
Analysts expect the European Union's statistics office, Eurostat will say consumer prices in the currency bloc came in at 3.9 per cent this month compared to a record 4.0 per cent in July, raising the prospects that inflation might now have peaked and be starting to edge down, the dpa reported.
Some analysts are predicting that the fall in inflation could be more dramatic with consumer prices dropping to 3.7 per cent in August after oil prices pulled back in recent weeks from record highs nearly topping 150 dollars a barrel to below 120.00 dollars.
The ECB is expected to leave interest rates on hold at its meeting next week as it attempts to size up the economic fallout from shrinking growth and high inflation.
But inflation still remains at almost double the ECB's target of "close to, but just below 2 per cent" with the buildup to the release Friday of the latest eurozone consumer price data accompanied by warnings from key members of the Frankfurt-based bank of the threat posed by resurgent inflation.
In particular, members of the ECB's 21-head rate-setting council have expressed concerns about the risks of high inflation fuelling so-called second-round effects of rising prices triggering demands for higher wages.
Evidence of inflationary pressures emerging in the eurozone prompted the ECB to hike rates for the first time in more than a year in July with the bank raising its refinancing rate by 25 basis points to 4.25 per cent.
However, the problem for the ECB is that leading indicators are flashing red over the eurozone economy with the credit crunch and slowing global growth having helped to push several economies such as Spain, Ireland and Italy to the brink of recession.
Further signs of the brittle mood currently prevailing in the eurozone are likely to emerge Friday when the European Commission presents its closely watched economic sentiment survey for the currency bloc.
Friday's inflation data follows the release of data this week showing inflation in key economies starting to ease with German inflation sliding to 3.1 per cent in August from 3.3 per cent in July.