Euro zone producer prices fall more than expected m/m in Oct

BRUSSELS, Dec 2 (Reuters) – Euro zone producer prices fell more than expected month-on-month in October and decelerated sharply year-on-year, underlining economists’ expectations that inflation may have peaked.

The European Union’s statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro fell 2.9% month-on-month in October for a 30.8% year-on-year rise, decelerating from an 41.9% annual increase in September.

It is the first time since May 2020 that producer prices have declined month on month. Economists polled by Reuters had expected a 2.0% monthly fall and a 31.5% year-on-year rise.

The overall monthly fall was mainly a result of a 6.9% monthly decline in energy price which pulled down the whole index. Year-on-year, energy price growth decelerated to 65.8% from 108.0% in September.

Producer prices are an early indication of trends in consumer prices, which the European Central Bank want to keep at 2.0% in the medium term.

Consumer inflation in November eased far more than expected, raising hopes that sky-high price growth is now past its peak and bolstering, if not outright sealing the case for a slowdown in European Central Bank rate hikes next month.

Industrial producer prices on the domestic market

% change compared with previous month

	May 22	Jun 22	Jul 22	Aug 22	Sep 22	Oct 22
Euro area
Total industry	0.6	1.3	4.0	5.0	1.6	-2.9
Total industry excluding energy	1.2	0.5	0.6	0.4	0.4	0.5
Intermediate goods	1.7	0.4	0.1	0.1	0.1	0.2
Energy	-0.5	3.2	9.3	11.9	3.1	-6.9
Capital goods	0.6	0.4	0.8	0.3	0.4	0.3
Durable consumer goods	0.9	0.8	0.9	0.4	0.3	0.5
Non-durable consumer goods	1.1	0.8	1.2	0.8	0.9	1.1
EU
Total industry	0.7	1.5	3.9	4.9	1.4	-2.5
Total industry excluding energy	1.4	0.5	0.6	0.4	0.4	0.5
Intermediate goods	1.7	0.6	0.1	0.1	0.1	0.3
Energy	-0.1	3.6	8.5	11.9	2.5	-6.6
Capital goods	0.7	0.4	0.8	0.3	0.4	0.3
Durable consumer goods	0.8	0.8	0.9	0.4	0.4	0.5
Non-durable consumer goods	1.3	0.7	1.2	0.9	1.0	1.2

Industrial producer prices on the domestic market

% change compared with same month of the previous year

	May 22	Jun 22	Jul 22	Aug 22	Sep 22	Oct 22
Euro area
Total industry	36.2	36.1	38.1	43.4	41.9	30.8
Total industry excluding energy	16.0	15.7	15.1	14.6	14.5	14.0
Intermediate goods	25.1	24.0	21.5	20.0	18.9	17.4
Energy	93.9	93.4	98.0	117.3	108.0	65.8
Capital goods	7.5	7.6	7.9	7.8	7.6	7.5
Durable consumer goods	9.1	9.6	9.8	9.9	9.8	9.8
Non-durable consumer goods	12.1	12.6	13.8	14.5	15.2	16.0
EU
Total industry	36.3	36.3	38.1	43.2	41.4	31.2
Total industry excluding energy	16.7	16.2	15.7	15.2	15.0	14.5
Intermediate goods	25.4	24.3	21.7	20.1	19.0	17.6
Energy	92.5	92.6	96.9	115.8	105.2	67.0
Capital goods	7.9	7.9	8.1	8.1	7.9	7.7
Durable consumer goods	9.6	10.1	10.3	10.3	10.1	10.1
Non-durable consumer goods	13.1	13.5	14.8	15.6	16.4	17.1