Eurozone producer prices rose more than expected in December, data showed on Wednesday, boosted mainly by a jump in energy costs, pointing to rising inflationary pressures early in the pipeline. The European Union's statistics office Eurostat said prices at factory gates in the 16 countries using the euro in December rose 0.8 percent month-on-month for a 5.3 percent year-on-year rise.
Economists polled by Reuters had expected a monthly rise of 0.7 percent and annual gain of 5.2 percent. The rise in producer prices, which translate into consumer price increases unless absorbed by intermediaries and retailers, was driven mainly by a 2.2 percent monthly increase and an 11.3 percent annual jump in the costs of energy. "It is a clear leading indicator of rising inflationary pressures, adding to the ECB's headache," said Carsten Brzeski, economist at ING bank.
The ECB, which meets on interest rates on Thursday, expects inflation to peak in March and then to ease again. ECB Governing Council member Ewald Nowotny has said he did not expect any rate rises in the first half of the year. Excluding the volatile prices of energy and construction, producer prices rose only 0.3 percent month-on-month and 3.3 percent year-on-year in the eurozone.
Consumer inflation jumped to 2.4 percent in January, an early estimate showed on Monday - the highest rate since October 2008 and above the European Central Bank's target of below, but close to 2 percent. There was no clear consensus among economists in the latest Reuters poll on when the European Central Bank would first raise rates, as the bank ponders controlling inflation or supporting struggling periphery members.
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