European inflation accelerated to the fastest in 2 1/2 years in April, increasing pressure on the European Central Bank to raise borrowing costs further.

Consumer-price growth in the 17-nation euro region quickened to 2.8 percent from 2.7 percent in March, the European Union’s statistics office in Luxembourg said today. That’s in line with an initial estimate on April 29 and the fastest since October 2008. Euro-area exports rose a seasonally adjusted 1.1 percent in March from February, a separate report showed.

The euro-region economy expanded at a faster pace than economists forecast in the first quarter, giving companies room to pass on surging commodity costs. ECB President Jean-Claude Trichet said on May 6 it’s important to remain “extremely alert” on price developments after policy makers last month raised the benchmark interest rate by 25 basis points to 1.25 percent, the first increase in almost three years.

“Inflation data and the strong euro-zone gross domestic product growth increase the risk that the ECB could tighten interest rates more aggressively,” said Howard Archer, chief European economist at IHS Global Insight in London. “July remains the most likely choice for the next ECB rate hike.”

The euro was little changed after the data were released, trading at $1.4113 at 11:25 a.m. in Brussels.

 The European Commission on May 13 raised its inflation forecast for this year to 2.6 percent from a previously projected 2.2 percent. In 2012, annual consumer-price growth may slow to 1.8 percent, the Brussels-based commission said. That’s above the ECB’s March projection of 2.3 percent and 1.7 percent, respectively.

Euro-region core inflation, which excludes volatile items such as food and energy, accelerated to 1.6 percent in April from 1.3 percent in the previous month, the statistics office said. That’s the fastest since April 2009.

Crude oil prices have increased 7.9 percent this year, breaching $100 a barrel in February for the first time in more than two years. Crude was at $98.46 a barrel at 10:14 a.m. in Brussels.

Companies are seeking ways to protect earnings from increasing costs. BASF SE, the world’s largest chemical company, said on May 6 the outlook has brightened in the last few months, helping it push through price increases needed to offset higher raw-material costs. The “good pricing power” seen in the first three months of the year extended into the second quarter, Chief Executive Officer Kurt Bock said that day.

With governments from Spain to Ireland struggling to reduce their budget deficits, Trichet signaled earlier this month that policy makers will keep borrowing costs steady in June. ECB Executive Board member Juergen Stark said on May 13 that the bank had indicated a “gradual rise in rates,” depending “on the situation, on the basis of incoming data.”

The euro-region economy is showing some signs of cooling after expanding 0.8 percent in the first quarter from the previous three months. Economic confidence weakened in April and investors also grew less optimistic this month. In Germany, Europe’s largest economy, sentiment of both executives and investors declined in April.

While the euro’s 5.7 percent ascent against the dollar this year has helped soften the impact of higher costs by making imports more affordable, it’s also undermining export growth. The region’s seasonally adjusted trade deficit narrowed to 900 million euros ($1.3 billion) in March from 2.1 billion euros in the previous month, today’s data showed. Imports rose 0.3 percent from February, when they advanced 0.8 percent.

Euro-area exports to the U.S. rose 30 percent in the year’s first two months from a year earlier, today’s report showed. Shipments to the U.K., the euro area’s largest market, increased 16 percent, while sales to China advanced 34 percent. Detailed data are published with a one-month lag.

Bloomberg News