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Euro zone producer prices fall in October on energy plunge

A plunge in energy prices pulled down the overall producer price index in the euro zone in October as expected, data from the European Union’s statistics office Eurostat showed on Tuesday.

Prices at factory gates in the 19 countries sharing the euro rose 0.1% month-on-month in October for a 1.9% year-on-year decline, mainly because of a 7.9% drop in energy prices from a year earlier.

Without that volatile component, industrial producer prices rose 0.3% year-on-year in October, slowing from a 0.4% annual rise in September.

Producer prices signal inflationary pressure early in the pipeline because, unless absorbed by intermediaries and retailers, changes are transmitted to the final consumer, impacting headline inflation.

The European Central Bank wants to keep consumer inflation below, but close to 2 percent over the medium term, but has struggled to accelerate price growth for years despite programmes of government bond buying on the market.

The bank decided in September to re-launch bond purchases as inflation remains too low.
Source: Reuters (Reporting By Jan Strupczewski; editing by Philip Blenkinsop)

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