Euro zone producer prices rise more than expected in June

Euro zone producer prices rose by more than expected in June for a second consecutive month, driven by soaring energy prices, figures from the European Union’s statistics office Eurostat showed on Tuesday.

Eurostat said prices at factory gates in the 19 countries sharing the euro increased 0.7 percent in monthly terms for a 3.1 percent year-on-year decline.

Both figures were above market forecasts. Analysts polled by Reuters had on average expected a 0.4 percent month-on-month rise and a 3.5 percent drop on a yearly basis.

Eurostat also slightly revised up the May yearly figure to -3.8 percent from the initial estimate of a fall of -3.9 percent.

The surge of producer prices in June on a monthly basis follows the 0.6 percent increase recorded the previous month and is the highest in 2016.

The headline figure is a positive sign for the European Central Bank which has been struggling for years to fight ultra-low inflation in the euro zone.

However, industry prices excluding the more volatile component of energy rose monthly only 0.2 percent, the same as in May.

Energy was the key component to drive euro zone producer prices up in June, recording a month-on-month 2.4 percent rise as oil became less cheap.

The June increase follows the sharp rise in May when energy prices went up 1.8 percent, slightly more than the 1.7 percent leap initially estimated by Eurostat.

Prices of intermediate goods grew 0.3 percent and non-durable consumer goods, such as clothing, were up 0.1 percent month-on-month, the same upswing recorded for prices of capital goods, like machinery.

Monthly prices of durable consumer goods, such as cars and fridges, were flat in June, confirming the zero growth of the previous month.

Source: Reuters