Euro zone producer prices edge up in August, unemployment rises

BRUSSELS (Reuters) - Euro zone producer prices edged higher month-on-month in August as expected but were still lower year-on-year and unemployment rose as forecast for the fifth month in a row because of the COVID-19 pandemic, data showed on Thursday.

The European Union’s statistics office Eurostat said producer prices in the 19 countries sharing the euro rose 0.1% month-on-month in August for a 2.5% year-on-year decline.

Economists polled by Reuters had expected the 0.1% monthly rise and forecast a 2.7% annual fall.

Volatile energy prices had the biggest impact on the both the monthly increase and the year-on-year fall. Excluding energy, prices at factory gates were flat month-on-month and 0.4% lower than a year earlier.

Producer prices indicate trends in consumer prices that the European Central Bank wants to keep growing below, but close to 2% over the medium term, but which have undershot that target for years.

ECB President Christine Lagarde set the scene on Wednesday for a change of strategy, possibly allowing inflation to overshoot after it has been low for too long.

Separately, Eurostat said euro zone unemployment rose to 8.1% of the workforce in August from 8.0% in July, continuing an upward trend caused by the economic downturn triggered by the pandemic.

Eurostat said 13.188 million people were without jobs in the euro zone in August, 251,000 more than in July.

Reporting by Jan Strupczewski; editing by Philip Blenkinsop