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Euro-Region Producer-Price Inflation Accelerates on Energy Cost

Oct. 2 (Bloomberg) -- Euro-area producer-price inflation accelerated more than economists forecast in August, led by surging energy costs, as the region’s economic slump showed signs of deepening.

Factory-gate prices in the 17-nation euro region rose 2.7 percent from a year earlier, after increasing a revised 1.6 percent in July, the European Union’s statistics office in Luxembourg said today. Economists had forecast an increase of 2.6 percent, the median of 13 estimates in a Bloomberg News survey showed. From the prior month, prices gained 0.9 percent after advancing 0.3 percent in July.

Crude oil prices have increased about 10.4 percent over the past three months, threatening to undermine consumer demand already hurt by budget cuts and rising unemployment across the region. Euro-area economic confidence declined in September and services and manufacturing output dropped, leaving companies with little room to pass on higher costs.

Energy costs on the producer level jumped 7.9 percent in August from a year earlier after rising 4.5 percent in the previous month, the statistics office said. That’s the biggest increase since March. Prices of intermediate goods rose 0.3 percent from a year ago, while capital goods were 0.9 percent more expensive.

In Germany, Europe’s largest economy, producer prices rose 1.6 percent from a year earlier, after increasing 0.9 percent in the previous month, today’s data showed. France reported a gain of 2.5 percent, with prices in Spain and Portugal increasing 4.1 percent and 4 percent, respectively. None of the euro-region members reported an annual price drop.

To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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