Euro-area producer prices jump 1.6 per cent in July as annual inflation accelerates to 5.8 per cent
Industrial producer prices in the euro area rose 1.6 per cent in July from June, driven mainly by a 5.6 per cent jump in energy costs, Eurostat reported. A report on the release said annual producer-price inflation accelerated to 5.8 per cent from 4.6 per cent in June, while the core rate excluding energy edged up only marginally to 3.1 per cent, and the monthly rebound beat the 1.2 per cent economists had expected after June's 0.3 per cent fall.
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Energy drives a 1.6 per cent monthly jump in factory-gate prices
Industrial producer prices rose 1.6 per cent in the euro area and 1.4 per cent in the European Union in July compared with June, and were 5.8 per cent and 5.6 per cent higher than a year earlier, Eurostat said. Energy drove the monthly move with an increase of 5.6 per cent, while intermediate goods prices were unchanged and capital goods rose 0.3 per cent. Energy was also the strongest annual component, up 12.9 per cent over twelve months. The largest monthly increases among member states were recorded in Ireland at 4.3 per cent and in Spain and Italy at 3.0 per cent each, while over twelve months Ireland led at 14.8 per cent, ahead of Lithuania at 12.9 per cent and Bulgaria at 12.5 per cent.[1]
Annual inflation accelerates to 5.8 per cent as the core rate barely moves
A report on the release put the acceleration in context, noting annual producer-price inflation rose to 5.8 per cent in July from 4.6 per cent in June and 5.9 per cent in May, meaning the year-on-year pace has stayed elevated for three consecutive months. Excluding energy, it said, producer-price inflation rose only marginally to 3.1 per cent from 3.0 per cent in June, underlining how much of the annual acceleration is concentrated in energy costs rather than broader industrial pricing. The report added that the monthly rebound of 1.6 per cent, following June's 0.3 per cent decline, outpaced the 1.2 per cent economists had forecast.[2]
Producer prices are a lagging signal for what consumers eventually pay
Eurostat noted that producer prices measure what factories charge rather than what households pay, so movements in the index reach consumer inflation only with a lag. The year-on-year pace has now stayed above 4.6 per cent for three straight months, climbing from June's 4.6 per cent and May's 5.9 per cent to July's 5.8 per cent, while the narrower measure that strips out energy has moved only from 3.0 per cent to 3.1 per cent over the same span. That gap between the headline and core readings shows how concentrated the current run-up is in energy costs rather than broader industrial pricing.[1], [2]
