RTTN:Eurozone Output Price Inflation Drops To Six-Month Low
Eurozone's producer price inflation slowed to the lowest level in six months in January, giving room for the European Central Bank to lower its policy rate at this week's meeting to revive the flagging economy.
Producer price inflation slowed to 1.9 percent from 2.1 percent in December, statistical office Eurostat said on Monday. The latest figure matched economists' expectations. The rate of growth was the lowest since July 2012, when prices rose 1.6 percent.
Energy prices increased at a notably weaker rate of 2.8 percent in January compared to 3.6 percent in December. Prices of capital goods rose 0.7 percent, after a 0.8 percent increase in the previous month.
The rate of increase for durable consumer goods prices eased modestly to 0.9 percent from 1 percent, while that for non-durable consumer goods stayed unchanged at 2.4 percent. Intermediate goods prices were higher by 1.3 percent from a year earlier.
Excluding energy prices, producer price inflation fell to 1.4 percent in January from 1.6 percent in the previous month.
The producer price index increased 0.6 percent compared to December, when it dropped by 0.2 percent, the agency said. Economists had forecast an increase of 0.5 percent.
Among member states, the largest annual increases were observed in Estonia, followed by Romania and Belgium. Meanwhile, Sweden logged the biggest decline.
Consumer price inflation eased to 1.8 percent in February, hitting the lowest level in two-and-half years, from 2 percent in January. Inflation moved within the central bank's target for the first time since late 2010.
"Muted inflationary pressures, further highlighted by soft January core producer prices, indicates that the ECB has ample scope to cut interest rates," IHS Global Insight Economist Howard Archer said.
In the European Union, overall output prices advanced 1.8 percent annually in January, after gaining 1.9 percent in December. Sequentially, producer prices edged up 0.6 percent in the EU, after falling 0.2 percent in December.
Research firm Sentix today said that investor confidence in the Eurozone declined in March after improving for six consecutive months.
The European Commission's economic confidence indicator for the single-currency bloc climbed to a 9-month high in February, marking the fourth successive monthly improvement, boosting expectations of a trend reversal in the bloc.
According to the latest Purchasing Managers' survey, Eurozone's manufacturing sector contracted further in February. The headline index came in at 47.9 in February, which was unchanged from January's 11-month high.
