By Paul Hannon
The prices of goods leaving the eurozone's factory gates fell during October at the slowest annual rate since mid-2013, a fresh sign that inflationary pressures are gradually returning to the currency area.
The European Union's statistics agency said Friday that producer prices rose 0.8% from September, and were down 0.4% from October 2015. The modest scale of the year-to-year decline was a surprise, since economists surveyed by The Wall Street Journal last week had estimated that prices were down 0.9%. Producer prices last fell at a slower annual pace in July 2013.
The surprisingly small decline supports other signs that consumer-price inflation is set to continue its recent rise over coming months. Figures released Wednesday showed consumer prices rose 0.6% year-over-year in November, having been below their year-earlier levels as recently as May.
Economists expect consumer prices to rise more rapidly in the final month of this year and in the early months of 2017 as earlier, sharp drops in energy prices fall out of the year-to-year comparison. According to the Eurostat figures, prices of goods other than energy were unchanged on the year in October, making it the first month since August 2013 in which they had not fallen.
But without a stronger pickup in domestic drivers of inflation, there are doubts about a more sustained increase toward the central bank's inflation target of just under 2%.
The figures are among the last pieces of economic data that will be available to European Central Bank policy makers as they prepare for their Dec. 8 meeting. With its ability to meet its target still in question, many analysts expect the ECB to announce an extension of its bond-buying program beyond its scheduled expiry in March 2017.
Write to Paul Hannon at firstname.lastname@example.org
(END) Dow Jones Newswires
December 02, 2016 05:14 ET (10:14 GMT)
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