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Euro zone producer prices fall much more than expected in Feb

BRUSSELS, April 2 (Reuters) - Euro zone producer prices fell by much more than expected in February, dragged down mainly by a sharp fall in energy prices as a result of the Russia-Saudi Arabia oil price war, data showed on Thursday.

The European Union’s statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro fell 0.6% month-on-month in February for a 1.3% year-on-year decline.

Economists polled by Reuters had expected only a 0.2% monthly and a 0.7% year-on-year fall.

Energy prices plunged 2.3% on the month and 6.5% year-on-year, Eurostat said. Without that volatile component, producer prices were flat against January and 0.5% higher than a year earlier.

Producer prices indicate inflationary pressures early in the pipeline because, unless their change is absorbed by retailers and intermediaries, they are transmitted to consumers.

The European Central Bank has been struggling for years to bring inflation closer to its target of price growth of 2% year-on-year over the medium term. (Reporting by Jan Strupczewski; editing by Philip Blenkinsop)

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