Prices at factory gates dropped much more than expected in the euro zone in January, data showed today, pointing to further consumer disinflation in coming months.
Producer prices dipped 0.8 per cent month-on-month in the 16 countries using the euro and fell 0.5 per cent year-on-year, European Union statistics office Eurostat said.
The monthly drop was led by a 1.5 per cent fall in energy prices. Intermediate goods were close behind with a 1.2 per cent decline. Non-durable consumer goods, which include food, fell 0.6 per cent on the month.
In year-on-year terms, energy again led the falls with a 2.7 per cent decline, intermediate goods prices fell 0.9 per cent and non-durable consumer goods 0.1 per cent.
January was the third straight month of monthly producer price declines in the euro zone's biggest economy, Germany, but year-on-year prices there were still growing, albeit more slowly each month.
In France and Italy, the second and third biggest euro zone economies, where the trend of monthly producer price falls has been much longer, January was the second month in a row also for annual price declines, which became deeper.
Producer prices are important to the European Central Bank because they show inflationary pressure, or the reverse, early in the pipeline.
The ECB aims to keep annual consumer inflation below, but close to, 2 per cent. It rose to 1.2 per cent year-on-year in February from 1.1 per cent in January, but economists said that was a temporary blip and should fall again in March.
Reuters