Factory gate inflation still rising across the Eurozone

FACTORY gate prices across the Eurozone rose at a slightly higher rate than expected in February, yet the data was tempered by a downward revision to January’s rate of inflation.

Industrial producer prices were up 0.8 per cent in February, yet January’s rise was reduced from 1.5 per cent to 1.3 per cent, the Eurostat office announced yesterday.

Despite the downward revision, ongoing price pressures cement the likelihood of the European Central Bank hiking interest rates this Thursday, according to Howard Archer of IHS Global Insight.

“The further spike up in Eurozone producer prices will reinforce the ECB’s concern that high energy and commodity prices are exerting serious inflationary pressures lower down the supply chain,” Archer said.

“We are now leaning towards the view that the ECB will hike interest rates by a further 0.25 per cent in both the third and the fourth quarters, taking them up to 1.75 per cent by the end of the year,” he added.

Across the wider European Union area, factory gate prices also increased by 0.8 per cent -- an annual rise of 7.1 per cent, compared to an annualised 6.6 per cent rise in the Eurozone.