Industrial pressures could see ECB postpone interest rate cut

Ben Southwood
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EUROZONE industrial inflation shot up in August, data released by Eurostat yesterday showed.

This jump could endanger European Central Bank (ECB) easing plans, analysts suggested.

Howard Archer at IHS Global Insight sent out a note entitled: “Sharp rise in Eurozone producer prices in August tilts odds further against ECB interest rate cut on Thursday.”

But he went on to predict an interest rate cut in the fourth quarter, calling underlying inflation “far from alarming”.

Industrial producer prices grew 0.9 per cent between July and August, up from the 0.3 per cent monthly inflation recorded in July.

This monthly rise was driven by a 2.4 per cent increase in energy prices, with downward pressure from minuscule rises in durable and non-durable consumer goods.

Excluding the big jump in energy prices, producer price inflation was just 0.3 per cent.