energy pulls down euro zone producer prices drop in July
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[September 02, 2014]
BRUSSELS (Reuters) - A drop in the highly
volatile energy prices depressed euro zone producer
prices in July as expected, underlining disinflationary
pressures in the single currency area ahead of the
European Central Bank's monetary policy meeting on
Prices at factory gates in the 18 countries sharing the euro fell as
anticipated by 0.1 percent in July against June and dropped 1.1
percent on the year, the EU's statistics office Eurostat said on
The annual drop was the steepest since April's 1.2 percent decline.
Producer prices are an early indication of price trends. Unless
their fluctuations are absorbed by retailers, they eventually
translate into consumer inflation or deflation.
Both the monthly and the annual declines were influenced by a 0.6
percent and 3.5 percent drop respectively in the costs of energy,
Prices in all other sectors, such as durable and non-durable
consumer goods, were flat in July when compared with June.
The ECB meets on Thursday, facing a dilemma how to respond to
vanishing inflation in the 9.6 trillion euro economy whose recovery
unexpectedly stalled in the second quarter, only two months after an
interest rate cut in June.
A majority of economists expect the ECB to stay on hold in September
and wait for effects of its last rate cut to kick in, including
targeted longer-term refinancing operations aimed to boost bank
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Producer prices in July, when compared with the same period last
year, rose only in three euro zone countries - Estonia, Ireland and
Latvia and were flat in the twice bailed-out Greece.
The largest year-on-year drop was recorded in Belgium with a 5.7
percent decline, followed by Slovakia's 2.9 percent annual fall.
(Reporting by Martin Santa)
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