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Euro zone producer price inflation slows in June to lowest this year

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Euro zone producer price inflation slows in June to lowest this year

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BRUSSELS (Reuters) – Euro zone prices at factory gates grew in June at their slowest pace this year, raising the prospect of a further easing of consumer inflation later in the year, data released by the European Union’s statistics office showed on Wednesday. Eurostat said industrial producer prices in the 19-country currency bloc increased 2.5 percent on the year in June, slowing from an upwardly revised 3.4 percent rise in May and a 4.3 percent surge in April. The June figure was the lowest this year in a further sign that inflationary pressures are easing, complicating European Central Bank’s plans to begin a gradual tightening of its monetary policy in autumn. Headline inflation was stable at 1.3 percent in July, far from its 2.0 percent peak reached in February, according to preliminary estimates released by Eurostat this week. The ECB’s target is for an inflation rate below, but close to 2 percent. Despite the monthly easing, producer prices increased on the year by more than forecast by economists polled by Reuters, who had predicted on average a 2.4 percent rise in June. On the month, prices eased in June by 0.1 percent, in line with market expectations. In May industrial prices went down by 0.3 percent on the month, slightly less than the 0.4 percent fall previously estimated by Eurostat. Eurostat’s estimates showed a slowdown of industry inflation also in its core indicator that excludes volatile energy prices, with a year-on-year 2.2 percent rise in June after a 2.4 percent increase in May a 2.6 percent rise in April. Inflation in energy prices in the manufacturing sector eased to 2.9 percent from 5.8 percent in May. Prices grew at a lower pace also for intermediate goods and durable consumer goods, such as cars. They grew at a stable pace for non-durable consumer goods, such as clothes, and capital goods.

(Reporting by Francesco Guarascio @fraguarascio)
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