- Markit economics
Change in the price of finished goods and services sold by producers in the 17-nation economy was negative once again in May, suggesting there will be scant upward pressure on consumer prices in coming months, the European Union's officials statistics agency said Tuesday. Factory gate inflation in the Eurozone eased 0.3% in the last month of spring, after a 0.6% drop a month earlier, below analysts' estimations of a 0.2% fall. The biggest drag on prices came from the energy sector, where prices fell 0.8% in May, the biggest drop in Eurostat's index. On a yearly basis prices slipped 0.1%.
A gauge of producer prices, which helps to anticipate increase and fall in inflation rate, underline the weak inflationary pressure, allowing the European Central Bank to make another rate cut on Thursday, to revive lending and bolster economic growth. According to analysts' projections, both consumer and factory inflation are likely to remain low for the rest of this year, even despite a slight increase in consumer price inflation in June. However, a pick-up in manufacturing sector may stop Mario Draghi from cutting rates again. Earlier this month Draghi stressed out that the ECB's policy will remain accommodative for as long as it will be needed.
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