Tuesday 4 February 2014

Energy costs push euro zone factory prices up m/m in Dec

 More expensive energy made euro zone producer prices grow faster than expected month-on-month in December, data showed on Tuesday, but year-on-year prices still fell, pointing to risks of deflation that the ECB will have to address later this week.

Prices at factory gates in the 17 countries using the euro in 2013 were up 0.2 percent in December against November, the EU's statistics office Eurostat said.

Analysts polled by Reuters expected prices to rise 0.1 percent on the month. But compared with the same period of last year, producer prices still fell 0.8 percent, even though the pace slowed from a 0.9 percent fall in November.

Changes in producer prices indicate inflationary pressures early in the pipeline because unless absorbed by retailers, they eventually translate into consumer inflation, which the European Central Bank wants to keep below, but close to 2 percent.

Consumer inflation unexpectedly fell in January, raising pressure on the ECB to consider fresh policy action on Thursday to counter deflation risks and support a weak euro zone recovery that may be running out of steam. [ID:nL5N0L531J]

The monthly rise in producer prices, the first one in three months, was driven by a 0.5 percent increase in the costs of energy, followed by a 0.1 percent rise in the prices of non-durable consumer goods.

While prices at factory gates in Europe's largest economy Germany started growing for the first time in three months by 0.1 percent, producer price growth in the second largest France slowed to 0.2 percent in December from 0.5 percent in November.

Producer prices in the southern periphery of the euro zone, slowly regaining competitiveness through years austerity policies, went up in December, rising 1.1 percent on the month in Spain, 0.4 percent in Portugal and 0.1 percent in Greece.

The European Central Bank will hold its monthly monetary policy meeting on Thursday in Frankfurt, but analysts 

polled by Reuters expected it will keep the key interest rate at record low of 0.25 percent. [ID:nL3N0L81YZ]


Source: Reuters

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