A surge in energy costs drove up eurozone producer prices in November, pointing to rising inflationary pressures as a rebound in industrial new orders showed the recovery in manufacturing gaining traction last year. The European Union's statistics office Eurostat said prices at factory gates in the 16 countries using the euro in November were 0.3 percent higher than in October and 4.5 percent higher year-on-year.
Economists polled by Reuters had expected the monthly increase and had pencilled in a 4.4 percent annual rise. "Pipeline price pressures are clearly on the rise, and this extends beyond food and energy," said Martin van Vliet, economist at ING bank.
A separate more forward-looking purchasing managers survey on Wednesday showed growth in the eurozone services sector slowed in December as activity in Ireland and Spain shrank, highlighting the two-speed nature of the region's recovery. That, like the beginnings of a pick up in producers' prices, points to tensions in policymaking for the whole region which may become more problematic for the European Central Bank later in the year. The growth of producer prices, which translate into consumer price increases unless absorbed by intermediaries and retailers, was driven mainly by a 0.9 percent monthly increase and a 8.8 percent annual jump in the costs of energy.
Van Vliet said that excluding the more volatile prices of food and energy, producer prices rose 4.1 percent year-on-year. Consumer inflation jumped to 2.2 percent in December, an early estimate showed on Tuesday, the highest rate in more than two years and above the European Central Bank's target of below, but close to 2 percent. Separately, Eurostat said industrial new orders in the eurozone in October rebounded from a September slump and rose 1.4 percent month-on-month for a 14.8 percent year-on-year gain.
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