Industry producer prices excluding construction:

April: +0.9% m/m, +2.8% y/y

MNI survey median: +0.6% m/m, +2.5% y/y
MNI survey range: +0.1% to +0.9% m/m

March: +0.6% m/m (unrevised)
February: +0.1% m/m (unrevised)
January: +0.7% m/m (unrevised)
December: +0.1% m/m (unrevised)
November: +0.2% m/m (unrevised)
—

FRANKFURT (MNI) – Eurozone producer prices rose in April for the
seventh consecutive month, and by more than expected, with gains noted
in most major components of the index, Eurostat reported on Wednesday.

The 0.9% monthly rise, the strongest jump since July 2008, left
prices 2.8% higher on the year, the biggest annual gain since November
2008.

With Brent crude prices having gained approximately 7.5% between
March and April, for a rise of nearly 70% on the year, energy’s upward
effect on PPI was notable. Excluding energy, which increased 1.9% m/m
and 7.7% y/y, core PPI was up 0.5% on the month and was 1.0% higher than
in April 2009.

Manufacturers cited in the May purchasing managers poll (PMI)
reported that energy prices and other costlier commodities, combined
with a weak euro, pushed input price inflation to its highest level
since July 2008. Further increases to output prices were also reported.

However, after hitting a two-year high in early May, oil prices
have fallen more than 20%, suggesting a more modest impact from energy
on PPI in the near future. Prices for other commodities, including iron
ore and coal, have also declined recently.

However, despite uncertainty regarding the global economic outlook,
experts remain optimistic about the recovery, which could add to upside
pressure on commodities.

“Commodity demand is expected to grow again rapidly as the global
recovery takes hold, whereas spare capacity and inventory buffers will
likely decline over time,” the International Monetary Fund said in its
latest World Economic Outlook.

“The tension between rapid demand and sluggish capacity growth is
therefore likely to reemerge once the global recovery matures into a
sustained expansion, thereby keeping prices at elevated levels by
historical standards,” the IMF said.

Intermediate goods, the first to show the impact of higher
commodity costs, surged 1.3% since March, their strongest jump since
1995, leaving prices up 2.7% on the year. Capital goods prices were
unchanged on the month, narrowing the annual decline to 0.1%.

Although producer prices for consumer durables and non-durable
goods both edged up by 0.1%, the annual changes went in opposite
directions. On the year, producer prices for consumer durables increased
0.4%, while for non-durables they slipped 0.4%.

Italy saw the strongest April jump in producer prices among the
larger Eurozone states, with PPI rising 1.2% m/m (+3.2% y/y), followed
by Spain at +1.0% m/m (+3.7% y/y), France at +0.9% m/m (+3.9% y/y) and
Germany at +0.8% m/m (+0.5% y/y).

A growing majority of industry firms polled by the European
Commission in May saw sales prices trending upwards in the near term,
with expectations now above the long-run average.

–Frankfurt newsroom +49 69 720 142; e-mail: frankfurt@marketnews.com —

[TOPICS: M$X$$$,00MT$$$$,M$XDS$]