Producer prices in the Eurozone increased for the first time in over three years, as inflation finally starts to take hold.
The annual rate of producer price inflation rose to 0.1 per cent in November, breaking a trend which had been in place since June 2013.
Energy price rises of 0.7 per cent were the main contributor to the rises, after Opec (the Organization of the Petroleum Exporting Countries) agreed its historic production cut in November.
Prices of intermediate goods, which are used to produce final goods for consumption, also rose by 0.5 per cent.
The measure was higher across the whole European Union, driven in part by the 4.4 per cent rise in the UK’s producer price index – a result of the post-Brexit vote devaluation of sterling.
The rises will add to belief that consumer prices – which the European Central Bank (ECB) is mandated to control – are set to rise further, after flash estimates showed it almost doubling in December to 1.1 per cent.
While the ECB will welcome the sign of recovery, economists in Germany have been pressurising it to raise interest rates to ensure inflation does not rise above target, but the central bank is keen to avoid triggering an investor sell-off during a weak recovery.
Howard Archer, chief UK and Europe economist at IHS Markit, noted: “Overall the ECB will likely be pleased with the November Eurozone producer price inflation data, although it will note that prices for consumer durable goods actually dipped while prices for capital goods were flat.
“However, there was a marked pick-up in the prices of intermediate goods which hints that underlying price pressures may be starting to firm,” he added.