RTTN:Eurozone August Producer Prices Drop More Than Expected
Eurozone producer prices declined more than expected in August on a sharp drop in energy prices, underlining the muted inflationary pressure in the economy.
Industrial producer prices dropped 0.8 percent in August from a year ago, which follows a flat reading in July, Eurostat reported Friday. This was the first decline in three months. Prices were forecast to ease by a more moderate 0.5 percent in August.
Energy prices dipped 3.3 percent and that of intermediate goods dropped 1 percent. These declines were partially offset by 0.6 percent increases each in capital and durable consumer goods and a 2 percent rise in non-durable consumer goods prices.
At the same time, month-on-month producer prices, remained flat in August, compared to the 0.2 percent rise in July.
Consumer price inflation fell to the lowest since early 2010 in September and is forecast to average 1.5 percent this year. The weak inflationary pressure provides ample scope for the European Central Bank to keep rates at lower level for an extended period of time.
IHS Global Insight's Chief European Economist Howard Archer said it is still very possible that the ECB will eventually end up cutting rates to 0.25 percent from 0.50 percent.
In the EU28, producer prices grew 0.1 percent in August from July, but slipped 0.3 percent from the previous year.
The highest monthly increases were seen in Estonia, Denmark and Ireland, while the biggest decreases were reported in Belgium, Romania, Poland and Lithuania.
