Producer prices in the euro area rise slightly more strongly than expected
In the Eurozone, producer prices have recently risen more than expected and indicate persistent inflationary pressure. In June, they increased by 0.5 percent month-on-month, according to Eurostat. Economists surveyed by Reuters had expected a rise of 0.4 percent, following a decrease of 0.2 percent in May.
Year-on-year, producer prices fell by 3.2 percent. Economists had expected a decline of 3.3 percent. As recently as early 2023, producer prices were rising at double-digit rates year-on-year.
At the time, high energy costs were fueling inflation, but now they are acting as a brake: In June, energy producer prices fell by 9.4 percent year-on-year. The prices recorded are those of products at the factory gate, before they are further processed or traded, and thus serve as an early indicator of the development of consumer prices. These rose by 2.6 percent in the Eurozone in July compared to the previous year.
The European Central Bank (ECB) aims for an inflation rate of two percent.
Despite the decrease in expected annual inflation rate, persistent inflationary pressure is still evident in the Eurozone, as indicated by the recent increase in producer prices. This rise in producer prices, while lower than anticipated, contributes to ongoing inflation concerns in the region.
