- IMF Managing Director Christine Lagarde
Maintaining price stability in the Eurozone is one of the main priorities for the European Central Bank. While last week's CPI report eased some of the pressure on Mario Draghi, a survey from Eurostat showed that prices of goods leaving the 18-nation's factory gate declined at the fastest annual rate since late 2009 in January, raising concerns that the bloc is facing a prolonged period of subdued inflationary pressure that can hinder the ongoing recovery.
A measure of producer prices, which reflects a change in the price of finished goods and services sold by the region's producers, turned lower 0.3% from December, and were 1.4% lower on a annual basis. While CPI advanced 0.8% in the 12 months to February, a steep decline in producer prices is suggesting that CPI is unlikely to accelerate any time soon. The main downside pressure came from energy suppliers, which reduced their prices by 1.4% and 3.8% during the last two months. Moreover, a 0.4% gain in the prices of a durable goods was not able to offset such a decline. In addition to that, a 0.1% drop in nondurable consumer goods is reflecting anaemic demand in the region.
Even so, consumer-facing companies are not expected to start raising prices immediately even when the cost of the goods are purchased by them is rising.
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