Industry producer prices excluding construction:

February: +0.1% m/m, -0.5% y/y

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

January: +0.7% m/m (unrevised)
December: +0.1% m/m (unrevised)
November: +0.2% m/m (revised from +0.1%)
October: +0.3% m/m (unrevised)
September: -0.4% m/m (unrevised)

FRANKFURT (MNI) – Eurozone producer prices rose somewhat less than
generally expected in February with cost increases in all categories
except for non-durable consumer goods, Eurostat said Wednesday.

The 0.1% monthly increase narrowed the annual decline to -0.5% from
-1.1% in January. At current trends, the annual change should turn
positive in the next couple months, partly reflecting a growing boost
from base effects.

Energy prices extended January’s gain, up 0.1% in February after a
2.0% surge January as oil prices rebounded quickly from a brief dip in
early February.

Energy costs thus did not play as dominant a role in pushing up
prices as in the previous month. Excluding energy, the PPI also edged up
0.1% on the month. The oil price trajectory, however, suggests a bigger
impact again in March.

In February, intermediate goods prices, the first to show the
impact of pipeline pressure from commodities, rose 0.3% m/m narrowing
the annual drop to 0.5%.

Capital goods and consumer durables were both up 0.1% m/m. On the
year, capital goods prices were down 0.6% and consumer durable prices up
0.2%. Non-durable consumer goods were the only category not posting
monthly price hikes. Cost remained unchanged as compared to January and
dropped 0.7% on the year.

Among member countries, the sharpest monthly price hikes were
recorded in Finland (+1.6%), the Netherlands (+0.9%) and Belgium (+0.8)
while the sharpest price cuts were in Slovakia (-1.7%), Germany (-0.2%)
and Greece (-0.2%).

On the year, prices declined most in Germany (3.1%) and went up the
most in Greece (6.1%).

After the dip in February, oil prices have recovered, trading at
above $80 in March, signaling a further acceleration in input prices
after February.

While the largest part of inflationary pressure thus far has
stemmed from commodity prices, some spillover is now evident at the
beginning of the production chain. Input prices charted in the composite
PMI polls have accelerated almost steadily in recent months, rising
to 56.9 in March from 54.6.

Output prices, on the other hand, continued to decline, albeit at
slowing speed. In March the preliminary composite PMI rose to 48.3
points from 46.9 in February and 46.2 in January, but continued to
undershoot the 50-point mark that signals expansion.

The diverging trends between input and output prices highlights the
persistent lack of firms’ pricing power amid fierce global price
competition in the context of anemic growth. Even if commodity prices
increase further, factory gate prices should thus remain subdued in the
months ahead.

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

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