April: flat m/m, +2.6% y/y

MNI survey median: +0.2% m/m, +2.7% y/y
MNI survey range: -0.2% to +0.5% m/m

March: +0.5% m/m, +3.5% y/y (revised from +3.3% y/y)
February: +0.6% m/m, +3.7% y/y (revised from +3.6% y/y
January: +0.9% m/m, +3.9% y/y (revised from +0.8%/+3.8%)
December: -0.2% m/m, +4.3% y/y
—

FRANKFURT (MNI) – Eurozone producer prices were overall stable in
April, giving the weakest annual rise in over two years, Eurostat
reported on Monday. Most analysts had expected a modest monthly
increase.

The annual PPI increase narrowed from 3.5% in March to 2.6% in
April, the smallest rise since March 2010 (+0.9%).

The main dampening effect came from energy prices, which dipped
0.1% on the month for a 6.8% rise on the year after +9.0% in March.
Excluding energy, core PPI rose 0.2% on the month and 1.3% on the year.

Intermediate goods producer prices were up 0.3% on the month to
give an annual increase of 0.6%. Capital goods rose 0.1% on the month
for a 1.1% annual gain. Consumer durables were unchanged on the month
and up 2.0% on the year, while non-durables edged up 0.1% on the month
to stand 2.4% higher on the year.

Brent crude continued its downward trend last month, hitting its
lowest level since October before parring back some losses, as higher
risk aversion pushed investors out of commodities and into safe-haven
assets.

Also weighing on oil prices was the rise in U.S. crude inventories
to their highest level in over two decades. The seventh consecutive fall
in the Chinese manufacturing PMI reported late last week, which
suggested a continued slowdown in the real economy in 2Q, no doubt
contributed as well.

The May manufacturing PMI poll showed input prices rising at their
slowest pace in four months, reflecting cheaper commodities and weak
demand for raw materials, while softer market demand and strong
competition left output prices unchanged.

Price pressures look likely to ease further in the near term. A
European Commission survey showed the proportion of manufacturers
expecting to raise prices in the coming months falling in May below
average to its lowest level since early 2010.

The slowdown in M3 broad money supply growth further below the
European Central Bank’s price stability guideline also suggests subdued
inflationary pressures in the coming months.

Likely driven by lower energy price inflation, Eurozone HICP slowed
to a 15-month low of +2.4% in May.

The Commission’s latest forecasts see consumer price inflation
averaging +2.4% this year and slowing to +1.8% in 2013. Results from the
ECB’s most recent Survey of Professional Forecasters are broadly
comparable, with inflation at +2.3% and +1.8%, respectively, this year
and next.

The ECB is scheduled to release its staff’s latest projections for
HICP this week. The most recent forecasts show inflation between +2.1%
and +2.7% this year and between +0.9% and +2.3% next year.

— Frankfurt bureau: +49-69-720 142; email: frankfurt@marketnews.com —

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