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Euro zone producer prices rise slower than expected in July

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Euro zone producer prices rise slower than expected in July

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BRUSSELS (Reuters) – Euro zone producer prices grew more slowly in July than expected by markets, data from the European Union’s statistics office Eurostat showed on Monday. Eurostat said prices at factory gates in the 19 countries sharing the euro were unchanged month-on-month, instead of 0.1 percent higher as expected by economists polled by Reuters, and rose 2.0 percent year-on-year, rather than the expected 2.2 percent. Month-on-month, producer prices went up for non-durable consumer goods and energy, and decreased for intermediate goods. Producer prices herald trends in consumer inflation because unless retailers and intermediaries absorb the price changes in factories, they are directly transmitted to consumers. Consumer inflation accelerated to 1.5 percent year-on-year in August from 1.3 percent in July. The European Central Bank wants to keep consumer inflation below, but close to 2 percent over the medium term. It has been buying tens of billions of euros of government bonds on the secondary market a month to flood the banking system with cash and in this way spur more credit to the economy and faster price growth, closer to its target. Next ECB policy meeting is on Thursday.

(Reporting By Jan Strupczewski)
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