Factories in the euro zone raised their prices in July as energy costs swelled, pointing to further upward pressure on consumer prices in the currency bloc later this year.
Evidence of continued inflationary pressure comes after official data showed consumer prices jumped further above the European Central Bank's target rate in August. The data could make it more awkward for the bank's policy board to pump more stimulus into the flagging economy at its highly anticipated meeting Thursday.
Producer prices in the 17 nations that use the euro rose 0.4% in July from June and were 1.8% higher than a year before, the European Union's statistics agency Eurostat said Tuesday.
Growth in producer prices could feed into headline inflation if retailers opted to pass the increases on to consumers. If they did, they would be adding to the squeeze on households' spending power, making a consumer-driven economic recovery less likely.
A preliminary estimate last month showed consumer prices rising 2.6% year-to-year in August, up from an annual rate of 2.4% in July. That is considerably above the ECB's target level of just below 2%.
Many economists expect the ECB on Thursday to look through the latest rise in inflation and focus on helping the crisis-hit euro-zone economy, either through a cut to its key interest rate or by setting out plans to buy the government bonds of struggling member states such as Spain.
