Euro zone producer prices jumped more than expected in January due to a strong boost from expensive energy, data showed today.
European Union statistics office Eurostat said prices at factory gates rose 1.2 per cent in January against the previous month, well above market expectations of a 0.8 per cent gain.
In year-on-year terms, producer prices jumped 5.3 per cent in the 12 countries using the euro against the consensus forecast of a 4.8 per cent increase.
Unless absorbed by intermediaries, the rise in producer prices will eventually be passed on to the consumer. That in turn will boost headline inflation, which the European Central Bank (ECB) wants to keep below but close to 2 per cent.
The ECB is expected to raise interest rates by 25 basis points to 2.5 per cent today to stem the inflationary pressure from energy and fast credit growth.
The rise in producer prices was fuelled by energy, the prices of which gained 4.1 per cent month-on-month and almost 20 per cent year-on-year in January, Eurostat said.
Without the energy component, producer prices rose 0.4 per cent on a monthly basis and 1.6 per cent in annual terms.
But other producer prices inched up too, signalling pressure on consumer prices down the line.