September 3, 2019 / 9:07 AM / 16 days ago

Euro zone producer prices inch up in July due to dearer energy

BRUSSELS (Reuters) - Euro zone producer prices rose slightly during July after four months of decline, but only because of an increase for energy, official estimates showed on Tuesday in a sign of very limited future inflation in the bloc.

The European Union’s statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro rose 0.2% in July, in line with market expectations.

The modest increase in July followed four consecutive monthly drops in industrial prices, including a 0.6% decline in June.

The July rise was driven by a surge of more volatile energy prices, which rose 1.0% after a 2.2% decrease in June. Excluding this component, producer prices fell 0.1% on the month in a new sign of persistently weak inflationary pressure.

Producer prices are an early indication of trends in consumer inflation, which the European Central Bank wants to keep below, but close to 2 percent over the medium term but has undershot since 2013.

Euro zone inflation remained low at 1.0% in August, according to Eurostat’s latest reading.

Prices for durable and non-durable consumer goods were both unchanged in July and for capital goods, such as machinery, increased by just 0.1%. Prices of intermediate goods fell 0.3% on the month.

The year-on-year increase in producer prices was also 0.2%, also in line with expectations. It has steadily decelerated from the 3.0% peak of 2019 in February.

Reporting by Francesco Guarascio @fraguarascio; editing by Philip Blenkinsop

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