Bloomberg News

Euro-Area Producer-Price Inflation Held at 5.8% in September

November 04, 2011

Nov. 4 (Bloomberg) -- Euro-area producer-price inflation held steady in September as lower costs for intermediate goods helped to offset more expensive energy.

Factory-gate prices in the 17-nation euro region rose 5.8 percent from a year earlier after a similar increase in August, the European Union’s statistics office in Luxembourg said today. That’s in line with the median of 19 economists’ estimates in a Bloomberg News survey. September producer prices rose 0.3 percent from August, when they fell a revised 0.2 percent in the month.

The euro-area economy is edging toward a recession as governments toughen austerity measures to contain a fiscal crisis just as global demand falters. The Organization for Economic Cooperation and Development on Oct. 31 slashed its euro-area growth projections for 2011 and 2012 to 1.6 percent and 0.3 percent, respectively, from 2 percent in both years.

Energy prices at the producer level surged 12.2 percent from a year earlier in September, compared with a gain of 11.4 percent in the prior month, today’s report showed. The cost of intermediate goods increased 5 percent after a 5.7 percent gain in August. The overall increase in producer prices in August was revised to 5.8 percent from 5.9 percent estimated earlier.

The euro-area inflation rate at the consumer level unexpectedly remained at a three-year high of 3 percent in October, complicating the European Central Bank’s task of bolstering the region’s faltering economy. The ECB yesterday responded by cutting the benchmark interest rate by 25 basis points to 1.25 percent.

--With assistance from Kristian Siedenburg in Budapest. Editor: Jones Hayden

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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