BRUSSELS – Euro zone producer prices decelerated year-on-year in December, but were still higher than expected, data showed on Friday, partially because of more expensive durable consumer goods.
Prices at factory gates in the 19 countries sharing the euro in December rose 1.1% month-on-month for a 24.6% year-on-year increase, slowing down from 27.0% year-on-year in November.
Economists polled by Reuters had expected a monthly fall in prices of 0.4% and a year-on-year deceleration to 22.5%.
More expensive energy was still the main driving force behind the higher producer prices, rising 2.5% month-on-month and 48.6% year-on-year as Russia’s invasion of Ukraine continues to create supply problems.
Without the volatile energy component, producer prices were down 0.1% month-on-month and rose 12.3% year-on-year, decelerating form 13.2% year-on-year in November.
The only component of the index that showed both a monthly and an annual rise was prices of durable consumer goods which went up 0.4% in December against November and were 9.7% higher than in December of 2021, compared to a 9.5% rise in November.
Producer prices are an early signal of inflationary trends because their changes are usually transferred onto final consumers. Consumer inflation in January slowed to 8.5% from 9.2% in November. The European Central Bank wants to keep inflation at 2.0% and has been raising interest rates aggressivley to curb price growth quickly.