Euro-area producer prices unexpectedly declined from a year earlier in April for the first time since 2010, indicating inflation will slow more and adding to arguments for further action by the European Central Bank.
Factory-gate prices in the 17-nation economy fell 0.2 percent after a 0.6 percent annual increase in March, the European Union’s statistics office in Luxembourg said today. That’s the first annual decline since February 2010, when prices fell 0.6 percent. Economists had projected a 0.2 percent gain in April, according to median of 16 estimates, in a Bloomberg News survey. (EUPPEMUY)
Euro-area annual consumer-price growth has been below the ECB’s 2 percent ceiling since February, though the rate accelerated to 1.4 percent in May. The ECB will keep its benchmark rate at a record low of 0.5 percent when it meets on June 6, according to the median of 59 economists in a separate Bloomberg survey.
“Our baseline scenario continues to be one of a very gradual recovery starting in the latter part of this year,” ECB President Mario Draghi said yesterday in Shanghai. ‘There are a few signs of a possible stabilization,” though the economic outlook is “challenging,” he said.
The euro was little changed against the U.S. dollar after the data, trading at $1.3073 at 11:04 a.m. in Brussels, up less than 0.1 percent on the day.
Energy costs at the producer level fell an annual 2 percent in April after a 0.3 percent decline in the prior month, today’s report showed. Prices of intermediate capital goods decreased 0.3 percent in April, while durable goods showed a 0.7 percent gain.
In Germany, Europe’s largest economy, producer-price inflation slowed to 0.1 percent in April from 0.4 percent, according to the report. French factory prices rose 0.6 percent, while those in Spain declined 0.5 percent.
From a the prior month, April producer prices declined 0.6 percent. The March year-on-year increase was previously estimated at 0.7 percent.
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