Bloomberg News

Europe Producer-Price Inflation Slows for Fourth Straight Month

March 02, 2012

Euro-area producer-price inflation slowed for a fourth month in January on weakening cost increases for energy and capital goods such as machines.

Factory-gate prices in the 17-nation euro region rose 3.7 percent from a year earlier after increasing 4.3 percent in December, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 3.5 percent, the median of 17 estimates in a Bloomberg News survey showed.

European companies are under pressure to eliminate jobs and lower costs to weather the region’s economic slump and tougher austerity measures from Spain to Greece. Euro-area unemployment jumped to 10.7 percent in January, the highest in more than a decade, and manufacturing output dropped last month.

“Companies are under serious pressure to keep their labor forces as tight as possible to contain their costs in the face of current weakened demand,” said Howard Archer, chief European economist at IHS Global Insight in London. The euro-area economy “is in serious danger of enduring a further gross-domestic- product decline in the first quarter.”

Energy costs in the euro area rose 9.2 percent from a year earlier after increasing 9.4 percent in December, today’s report showed. Capital goods were 1.3 percent more expensive, compared with a 1.6 percent gain in the prior month.

Producer prices rose 0.7 percent in January from December, the report showed. In the 27-nation EU, prices increased 0.7 in the month and 4.4 percent in the year.

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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