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Euro zone producer prices in record surge in Dec due to energy

By Reuters

BRUSSELS – Euro zone producer prices surged at a record rate in December, as expected, on soaring energy costs, data showed on Thursday, pointing to continued pressure on already record high consumer inflation.

The European Union’s statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro rose 2.9% month-on-month in December for a 26.2% year-on-year surge. The latter is the highest ever annual reading since measurements started in January 1996, Eurostat said.

Economists polled by Reuters had expected a 2.8% monthly increase and a 26.1% year-on-year jump.

The December readings were mainly influenced by the soaring prices of energy which increased 7.0% month-on-month and whopping 73.4% year-on-year.

Without the volatile energy component, producer prices went up only 0.5% on the month and 10% year-on-year.

Producer prices typically translate, with a delay, into higher prices for consumers as manufacturers pass on their rising costs.

Euro zone consumer inflation in January increased to 5.1% year-on-year while the European Central Bank wants to keep it at 2% over the medium term.