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Euro-Area Producer Prices Rise at Slowest Rate Since 2010

April 4 (Bloomberg) -- Euro-area producer-price inflation slowed more than economists forecast in February to the lowest annual rate in almost three years, led by easing price growth for energy.

Factory-gate prices in the 17-nation economy rose 1.3 percent from a year earlier, compared with a 1.7 percent increase in the prior month, the European Union’s statistics office in Luxembourg said today. That is the smallest annual increase since March 2010 and below the 1.4 percent gain forecast by economists, according to the median of 17 estimates in a Bloomberg News survey.

The European Central Bank meets today in Frankfurt to decide on interest rates after a month in which euro-area leaders mismanaged a bailout of Cyprus and the euro fell to its lowest level of the year against the dollar. ECB President Mario Draghi said on March 7 that underlying consumer price pressures remain contained.

The ECB probably will leave its benchmark rate at a record low of 0.75 percent, according to 54 of 56 economists in a Bloomberg survey. The decision is due at 1:45 p.m. in Frankfurt.

The euro was lower against the U.S. dollar, trading at $1.2792 at 11:05 a.m. in Brussels, down 0.5 percent on the day.

Energy costs at the producer level rose an annual 1.6 percent in February after a 2.2 percent increase in the previous month, today’s report showed. Prices of intermediate goods rose 0.7 percent after a 1.3 percent gain in January.

In Germany, Europe’s largest economy, producer-price inflation decelerated to 1.2 percent in February from 1.7 percent in January.

The January increase in euro-area producer prices was revised down from a 1.9 percent gain estimated earlier, the statistics office said. From the prior month, factory-gate prices rose 0.2 percent in February, today’s report showed.

To contact the reporter on this story: Patrick Henry in Brussels at phenry8@bloomberg.net

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

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