Industry producer prices excluding construction:

August: +0.1% m/m, +3.6% y/y

MNI survey median: +0.2% m/m, +3.7% y/y
MNI survey range: -0.1% to +0.4% m/m

July: +0.2% m/m, +4.0% y/y
June: +0.3% m/m, +3.1% y/y (revised from 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
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FRANKFURT (MNI) – Industrial producer prices in the Eurozone rose
in August for the 11th consecutive month, leaving the producer price
index at its highest level since November 2008, Eurostat reported on
Monday.

The 0.1% monthly gain was below general expectations, however, and
trimmed the annual growth rate to +3.6% from July’s +4.0% figure.
Compared to the second quarter, producer prices were up 0.6% on average
in both July and August.

Excluding energy production prices, which were 0.4% lower than in
July, but up 7.5% on the year, core producer price inflation accelerated
to +0.2% and +2.2% on the month and year, respectively.

Recovering in the latter half of August, average oil prices
continued gaining strength in September and peaked on Friday at near
two-month highs before settling at just under $83 dollars a barrel,
above the upper end of the $60-$80 price range currently viewed as
“comfortable” by OPEC. With Brent Crude prices having hit a trough in
September 2009, energy’s upward contribution to overall monthly PPI
should resume, while its contribution to annual PPI should continue,
both in the short term.

However, downside risks to oil prices could materialize as the
global economic recovery loses steam, thus hampering oil demand.

Often first among of the PPI components to reflect trends in
commodity prices, intermediate goods output prices rose 0.4% on the
month, doubling July’s gains and resulting in an annual growth rate of
+4.7%. Conversely, capital goods production prices fell 0.1% on the
month after remaining stable in July to give an annual rate of +0.5%.

Non-durable consumers goods output price inflation remained
unchanged at +0.2% m/m, boosting the annual rate to +0.4%, while durable
consumer goods producer prices rose 0.1% on the month, also in line with
July’s gain, for a +1.1% annual print.

The strongest monthly gain in PPI among the larger Eurozone states
was in Italy (+0.2% m/m, +3.7% y/y), followed by France (+0.1%/+3.4%),
Spain (+0.1%/2.7%) and Germany (flat/+3.2%).

Driven by stronger input price inflation in Germany and Italy,
Eurozone input price inflation continued to pick up in September, Markit
Economics’ manufacturing purchasing managers index (PMI) showed.
However, firms were able to pass on at least a portion of the increased
costs to their clients, resulting in the sixth consecutive increase in
output price inflation last month.

Selling-price expectations in the manufacturing sector also rose in
September, the European Commission reported, citing respondents to its
sentiment survey. As a result, the Commission sub-indicator jumped to
its highest level in two years, well up from the long-run average.

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

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