Euro zone factory prices add to ECB headache but unemployment falls

[February 02, 2016]  By Robert-Jan Bartunek

BRUSSELS (Reuters) - Prices at factory gates in the 19 countries sharing the euro fell by more than expected in December, in another sign of the challenges facing the European Central Bank in bringing inflation nearer to its medium-term target.

Producer prices fell by 0.8 percent in December, compared with the previous month and by 3.0 percent compared to the same period a year ago, the European Union's statistics office Eurostat said on Tuesday.

This was below the average expectations in a Reuters poll of 13 economists which forecast prices to drop by 0.6 and 2.8 percent respectively.

European Central Bank President Mario Draghi has promised to increase inflation, rejecting criticism of the ECB's loose monetary policy and arguing that sluggish growth in prices was damaging the euro zone economy.

The ECB's mandate is to keep inflation just under 2 percent a year.

In a rare piece of good news for the euro zone, shaken by years of economic stagnation and crisis, unemployment fell by more than expected to 10.4 percent of the working population, from 11.4 percent a year ago.

Over the past year, the number of jobless dropped in southern Europe, especially in Spain and Portugal.

In the wider European Union, unemployment was unchanged at 9.0 percent, with the lowest levels of job seekers in the Czech Republic, Germany and Britain.

(Reporting by Robert-Jan Bartunek; editing by Robin Emmott)

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