Energy costs push euro zone factory prices up m/m in Dec

Tue Feb 4, 2014 5:02am EST

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* Producer prices rise 0.2 pct m/m, fall 0.8 pct y/y
    * Monthly rise driven by energy, non-durable consumer goods
    * Price growth in Spain, Portugal outpaces overall euro zone

    BRUSSELS, Feb 4 (Reuters) - More expensive energy made euro
zone producer prices grow faster than expected month-on-month in
December, data showed on Tuesday, but year-on-year prices still
fell, pointing to risks of deflation that the ECB will have to
address later this week.
    Prices at factory gates in the 17 countries using the euro
in 2013 were up 0.2 percent in December against November, the
EU's statistics office Eurostat said.
    Analysts polled by Reuters expected prices to rise 0.1
percent on the month. But compared with the same period of last
year, producer prices still fell 0.8 percent, even though the
pace slowed from a 0.9 percent fall in November.
    Changes in producer prices indicate inflationary pressures
early in the pipeline because unless absorbed by retailers, they
eventually translate into consumer inflation, which the European
Central Bank wants to keep below, but close to 2 percent.
    Consumer inflation unexpectedly fell in January, raising
pressure on the ECB to consider fresh policy action on Thursday
to counter deflation risks and support a weak euro zone recovery
that may be running out of steam. 
    The monthly rise in producer prices, the first one in three
months, was driven by a 0.5 percent increase in the costs of
energy, followed by a 0.1 percent rise in the prices of
non-durable consumer goods.
    While prices at factory gates in Europe's largest economy
Germany started growing for the first time in three months by
0.1 percent, producer price growth in the second largest France
slowed to 0.2 percent in December from 0.5 percent in November.
    Producer prices in the southern periphery of the euro zone,
slowly regaining competitiveness through years austerity
policies, went up in December, rising 1.1 percent on the month
in Spain, 0.4 percent in Portugal and 0.1 percent in Greece.
    The European Central Bank will hold its monthly monetary
policy meeting on Thursday in Frankfurt, but analysts polled by
Reuters expected it will keep the key interest rate at record
low of 0.25 percent.
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