August 2, 2013 / 9:07 AM / in 5 years

Euro zone factory prices flat m/m in June as expected

BRUSSELS (Reuters) - Prices at factory gates in the euro zone were unchanged in June against May as expected, data showed on Friday, underscoring the European Central Bank’s expectations for subdued inflation.

The bloc of 17 countries using the euro is expected to emerge from its longest recession in history and return to very modest growth in the second half of the year, but will need more time for growth to strengthen.

Against June 2012, euro zone factory prices rose 0.3 percent -- the first year-on-year rise in three months, the European Union’s statistics office Eurostat said.

Prices of food and other non-durable goods rose 0.3 percent in June against May, the strongest gain since September last year, but they were offset by a 0.2 percent drop in the cost of intermediate goods -- chemical products, fuels and construction materials.

Producer prices in Spain, where the economy is expected to stabilize after a two-year slump, were flat, like in Germany.

Prices in France fell 0.2 percent and 0.4 percent in the Netherlands. Italy was the only large euro zone economy to report a rise in June with 0.4 percent growth on the month.

Producer prices, which help anticipate rises or falls in consumer prices, underline the weak inflationary pressures that have allowed the ECB to cut interest rates to a record 0.5 percent in May as one of the steps aimed to help the recovery.

The European Central Bank (ECB), which held rates at record low on Thursday reaffirming they will stay so for an extended period of time, expects inflation rates to fall temporarily in coming months with risks still broadly balanced.

Reporting by Martin Santa; editing by Jan Strupczewski

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