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BERLIN, Feb 27 (Reuters) - German inflation unexpectedly picked up a shade in February but lower fuel costs kept the rise muted and analysts said the data still left plenty of room for the European Central Bank to cut interest rates next week.
Preliminary consumer price index (CPI) data from Europe's biggest economy showed annual inflation accelerated to 1.0 percent in February from 0.9 percent in January, the Federal Statistics Office said on Friday.
On the month, prices rose by 0.6 percent.
A Reuters poll of economists had pointed to a rise of 0.8 percent on the year and a rise of 0.4 percent on the month.
Data from Germany provides an important early insight into inflation trends across the euro zone. The flash estimate of euro zone inflation for February will be released on Monday and is currently forecast at 1.0 percent year on year.
Earlier Eurostat confirmed euro zone inflation for January was 1.1 percent, down from 1.6 percent in December.
Germany's February inflation rise was limited by year-on-year falls of between 12.1 and 13.9 percent in fuel costs in six German states, data from which are used to calculate the preliminary national figures.
The states' data showed that seasonal goods such as fruit and vegetables and package holidays became dearer in February.
"The inflation rate will probably fall in the coming months," said Commerzbank economist Christoph Weil. "The relatively low inflation (rate) gives the ECB room for an interest rate cut."
Europe is battling recession and Germany is expected to suffer its biggest contraction this year since World War Two.
The EU-harmonised price index (HICP) showed prices rose by 0.7 percent on the month. Year on year, HICP rose by 1.0 percent, compared with a gain of 0.9 percent in January.
HICP was expected to show a rise of 0.3 percent on the month, with inflation easing to 0.7 percent on the year.
The ECB's main lending rate is set at 2.0 percent and a Reuters poll of 78 economists showed most expected the bank to cut to a record low of 1.5 percent on March 5.
ECB Governing Council member Axel Weber said this week the bank should not cut its rates below one percent.
(Reporting by Paul Carrel and Brian Rohan; Editing by Jason Neely)