September 4, 2018 / 9:07 AM / 2 months ago

Euro zone producer prices up more than expected in July

BRUSSELS (Reuters) - Euro zone producer prices rose slightly more than forecast in July, driven by expensive energy, data released on Tuesday by the European Union statistics agency showed.

A vendor gets a five Euro bank note from a customer at the central market in Athens, Greece, July 8, 2015. REUTERS/Christian Hartmann/File Photo

Eurostat said prices at factory gates in the 19 countries sharing the euro rose 0.4 percent month-on-month in July against market expectations of a 0.3 percent rise in a Reuters poll of economists.

Year-on-year, producer prices rose 4.0 percent in July, against market expectations of a 3.9 percent gain.

Energy prices rose 1.1 percent on the month and were 10.7 percent higher than a year earlier, making energy the biggest variable in the overall index.

Without volatile energy, producer prices rose only 0.1 percent month-on-month and 1.7 percent year-on-year, confirming the view of European Central Bank chief Mario Draghi that spiking energy prices are the main reason for higher inflation.

Prices at factory gates herald trends in consumer inflation because unless absorbed by intermediaries or retailers, higher producer costs translate directly into higher consumer prices.

The European Central Bank wants to keep consumer inflation below, but close to 2 percent over the medium term. An early Eurostat estimate showed last week that in August, consumer inflation was 2.0 percent year-on-year.

Reporting by Francesco Guarascio; editing by Jan Strupczewski

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