Lower energy costs slowed the growth of prices at factory gates in January in the euro zone, data showed today.
The European Union's statistics office Eurostat said producer prices in the 13 countries using the euro rose 0.1 per cent month-on-month, as expected by economists, for a 2.9 per cent year-on-year gain, just below a consensus of 3.0 per cent and down from 4.1 per cent in December.
The energy component of producer prices fell 1.0 per cent month-on-month, offsetting a 0.7 per cent jump in durable consumer goods and a 0.6 per cent increase in intermediate goods.
But economists noted that since January, prices of oil have risen by around $10 a barrel to $62 a barrel now, which was likely to boost the energy component in the index in February.
So-called core producer prices, which exclude construction and energy costs, accelerated to 0.4 per cent month-on-month from two months of 0.1 per cent gains, for a 3.4 per cent annual rise.
Producer price increases are usually at least partly passed on to increasingly optimistic euro zone consumers, whose purchasing power rises as unemployment falls.
The data pointing to subdued inflationary pressures is unlikely to avert a rise in European Central Bank (ECB) interest rates.
The ECB wants to keep consumer inflation just below 2 per cent and is widely expected to raise interest rates to 3.75 per cent from 3.5 per cent on March 8th to stem inflationary pressures from the relatively fast growing economy.