June: -0.5% m/m, +1.8% y/y

MNI survey median: -0.4 m/m, +1.9% y/y
MNI survey range: -0.6% to +0.2% m/m

May: -0.5% m/m, +2.3% y/y (unrevised)
April: flat m/m, +2.6% y/y (revised from +0.1 m/m)
March: +0.5% m/m, +3.5% y/y (unrevised)
February: +0.6% m/m, +3.7% y/y (unrevised)
—

FRANKFURT (MNI) – Eurozone producer prices fell for the second
consecutive month in June to their lowest level since January, reducing
the annual rate to its slowest pace in over two years, Eurostat reported
on Thursday.

Mirroring May’s downturn, June’s 0.5% slide brought the annual PPI
rise to 1.8%, its lowest rate since March 2010.

Energy remained the main driver behind the further fall in prices,
as evidenced by core PPI slipping by a more modest 0.1% on the month.
Yet the energy component continued to fuel annual developments, with the
core rate rise only half that of the headline figure.

Nevertheless, annual energy inflation continued to decelerate in
June, easing to a 27-month low of +4.8%, as prices fell 1.8% on the
month.

While Brent crude prices remain above $100 a barrel, favourable
base effects and slowing global economic growth should limit further
upside pressure from energy on the overall price index.

In its most recent Oil Market Report, the International Energy
Agency projected global oil supply capacity keeping slightly ahead of
expected moderate demand growth next year, potentially averting price
shocks in the absence of major geopolitical tensions and supply outages

However, while the forecasts “hint at something of a price ceiling,
the latent potential of emerging market demand growth and ongoing risk
of nasty supply surprises could keep prices stubbornly high in absolute
terms,” the IEA cautioned.

Intermediate goods output prices fell 0.3% on the month, reducing
the annual rate to +0.1%, while capital goods inflation was unchanged at
+0.1% for a +1.1% rate on the year.

Consumer durables prices were stable between May and June, while
non-durables managed a modest 0.1% gain on the month. In annual terms,
prices for both components were up 1.9%, unchanged from May.

Pipeline price pressures should continue to wane. Cheaper raw
materials and commodities brought input prices down at their fastest
pace in almost three years in July, while all Eurozone states save
France reported lower prices at the factory gate, a recent PMI poll
showed.

Amid deteriorating order books and a further downward revision in
production expectations, a growing majority of manufacturers are looking
to cut selling prices in the coming months, the European Commission
noted.

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

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