Industry producer prices excluding construction:
July: +0.2% m/m, +4.0% y/y
MNI survey median: +0.3% m/m, +3.7% y/y
MNI survey range: -0.3% to +0.3% m/m
June: +0.3% m/m, +3.0% y/y
May: +0.3% m/m, +3.1% y/y
April: +1.0% m/m, +2.8% y/y
March: +0.6% m/m, +0.9% y/y
February: +0.1% m/m, -0.4% y/y
—
FRANKFURT (MNI) – Output prices in the Eurozone’s industrial sector
continued their monthly climb in July, though by slightly less than
expected, with energy once again leading the charge, Eurostat reported
on Thursday.
On the month, the producer price index (PPI) increased 0.2%, just
short of analysts’ expectations, leaving the annual change at +4.0%, its
strongest jump since October 2008.
While Brent crude oil prices rose on average just over 2% from
July, overall energy production prices increased 0.6% monthly to give an
annual gain of 9.7% on the year, also the highest since October 2008.
Given that oil prices rebounded in August 2009 before hitting
another trough the following month, energy’s upward contribution to
annual changes in the overall producer price index should fluctuate over
the next two months before stabilizing, barring any significant
short-term price movements in crude.
Core producer price inflation, which factors out the effects of
energy price movements, slowed to +0.1% on the month, leaving the annual
figure at +2.0%, unchanged from June’s level.
Still, downside risks to future oil demand and thus oil prices
could materialize if the global economy slows in the second half of this
year, as is widely expected.
In its Oil Market Report last month, the International Energy
Agency (IEA) noted that some economists are not ruling out the
possibility of a double-dip recession, which would have a significant
impact on oil demand forecasts.
Intermediate goods production prices, which are often the first to
reflect movements in commodity prices, also increased by 0.1% for annual
growth of 4.5%, while capital goods output prices were unchanged for the
second month in a row, leaving prices up 0.5% compared to July 2009.
Non-durable consumer goods production price inflation slowed to
+0.1% on the month, but picked up modestly to +0.2% on the year, while
stagnant durable consumer goods production prices left the annual price
change at +0.9%, up from June’s figure.
Among the larger Eurozone states, only Germany’s PPI increased on
the month (+0.5%), while output prices in both Italy (-0.1%) and Spain
(-0.2%) lost ground in July. French data for July were unavailable.
On the year, Italy led the way in gains, with its PPI jumping 4.1%,
followed by Germany at +3.6%, and Spain at +3.2%.
The most recent manufacturing purchasing managers index (PMI)
suggests that pipeline price pressures may be diminishing in the near
term.
According to firms polled, both input and output price inflation
continued to decline in August, falling to their lowest levels in five
months. Based on the latest European Commission survey, the proportion
of manufacturers who expect selling prices to trend upwards remained
only slightly above average.
In its latest World Economic Outlook report, the International
Monetary Fund projected non-fuel commodity prices would rebound 15.5%
this year after slipping almost 20% in 2009. The recovery is not
expected to last, however, with the IMF forecasting a 1.4% drop in
commodity prices in 2011.
— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —
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