BRUSSELS – Euro zone producer prices fell a bit more than expected month-on-month in March, data showed on Thursday, pointing to a further slowdown in consumer prices as the European Central Bank is expected to announce yet another interest rate rise.
The European Union’s statistics office Eurostat said prices at factory gates in the 20 countries sharing the euro fell 1.6 percent in March against February and grew 5.9 percent year-on-year, decelerating sharply form 13.3 percent annual growth in February.
Economists polled by Reuters had expected a monthly fall of 1.7 percent and a 5.9- percent year-on-year rise.
Producer prices are an early indication of trends in consumer inflation, which the ECB wants to keep at 2 percent over the medium term, but which still stood at 7 percent in April. The ECB has been raising rates since the middle of 2022.
The bank is set to announce another interest rate rise later on Thursday, increasing borrowing costs to 3.75 or even 4 percent to fight the persistently high inflation.
Eurostat said the monthly fall in producer prices was mainly thanks to a 4.8- percent drop in energy costs and a 0.4- percent easing in prices of intermediate goods.
Falling energy prices were also keeping the year-on-year reading down, because without energy, producer prices were 8 percent higher than a year earlier, mainly because of a 13.4- percent increase in non-durable consumer products, such as food. Durable consumer products, however, were also boosting the overall index, rising 8.2 percent year-on-year in March.
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