Euro zone Dec sentiment unchanged, Nov producer prices fall

BRUSSELS: Euro zone economic sentiment was unchanged in December against the previous two months, data showed on Thursday, as a more upbeat end-of-year mood in the services and retail sectors and among consumers was offset by a gloomier industry.

A monthly survey by the European Commission showed the economic sentiment in the 18 countries that were using the euro in December was 100.7, the same as in November.

Sentiment among consumers improved to -10.9 in December from -11.5 in November and the mood in the retail sector rose to -5.3 from -6.0 buoyed by the Christmas shopping spree.

In a separate release, the European Union's statistics office said that retail sales in November rose more than expected at 0.6 percent on the month for a 1.5 percent year-on-year gain.

But the economic survey also showed that consumers' inflation expectations 12 months ahead continued to fall, reaching 2.7 against 5.7 in November, well below the average since 1990 of 20.2.

The European Central Bank is concerned that if inflation stays too low for too long, it will change inflation expectations and make consumers hold back their purchases in the hope of even lower prices, triggering deflation.

Inflation in December turned negative for the first time since October 2009 as prices in the euro zone fell 0.2 percent year-on-year, data from the European Union's statistics office showed on Wednesday.

Euro zone inflation has been below 1 percent, which the ECB calls the "danger zone" for deflation, since October 2013.

More gloom on price growth came in a separate Eurostat release that prices at factory gates, which show inflationary pressures early in the pipeline, fell 1.6 percent year-on-year in November, its weakest level in eight months, pulled down mainly by a 5 percent drop in energy prices.

Economists expect the European Central Bank, which wants to keep consumer prices close to 2 percent over the medium term, to announce a plan of buying government bonds at its next meeting on Jan 22, to inject more cash into the economy and make prices rise again and stem the risk of deflation.