Economy

Euro zone producer prices plunge more than expected in March

Covid-19 pandemic has reduced demand for energy

Photograph: iStock

Tue May 5 2020 - 13:37

Euro zone producer prices suffered their steepest fall since the 2008 financial crisis in March, data showed on Tuesday, dropping by more than expected as the Covid-19 pandemic sharply reduced demand for energy.

The European Union's statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro fell by 1.5 per cent month-on-month in March for a 2.8 per cent year-on-year decline.

The former was the steepest decline since November 2008. Economists polled by Reuters had expected drops of 1.3 per cent for the month, and 2.6 per cent year-on-year.

Producer prices show inflationary pressure early in the pipeline because unless their changes are absorbed by retailers and intermediaries, they directly affect the final price for consumers.

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Energy prices tumbled 5.5 per cent on the month and by 11.3 per cent year-on-year in March pulled down by the oil-price war between Russia and Saudi Arabia and falling demand for fuel as economies around the world ground to a halt because of the pandemic.

Without the volatile energy component, industrial producer prices fell only 0.2 per cent on the month and were 0.2 per cent higher year-on-year. – Reuters

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