BRUSSELS, April 4 (Reuters) - Euro zone producer prices
growth slowed sharply in February, data from the EU's statistics
office Eurostat showed on Thursday, in a sign inflationary
pressures were weak and there was room for a European Central
Bank rate cut.
Factory prices in the 17 countries using the euro increased
by 0.2 percent in February from January, slightly above the 0.1
percent expected by economists polled by Reuters.
But from the same month a year ago, prices rose 1.3 percent
-- a seven-month low and below market expectations of a 1.5
percent rise -- as rises in the cost of energy trailed off.
Eurostat also revised downwards producer price inflation
data for January from 0.6 percent month-on-month to 0.4 percent
and from 1.9 percent year-on-year to 1.7 percent.
The data on producer prices, which anticipate rises or falls
in consumer prices, adds to a growing basket of indicators
showing inflationary pressures in the euro zone are easing.
It could give the ECB added reason to consider cutting
interest rates from the current 0.75 percent, as the bank's
closely watched consumer inflation figure remains below its
target of close to, but below, 2 percent.
The ECB's governing council meets on Thursday but even with
data showing inflationary pressures easing, economists still
broadly still see the bank keeping its main interest rate
unchanged at the current record-low of 0.75 percent .
A Reuters poll of 73 economists showed little change in
expectations, with rates set to remain at the highest level
among the world's major central banks.
Both consumer and factory inflation were driven up last
year, in spite of the euro zone's recession, by high world oil
prices and tensions between Iran and the West over Tehran's
nuclear ambitions that pushed up the cost of energy.
(Reporting By Ethan Bilby)
Keywords: EUROZONE PPI/
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