Brussels, Belgium (4E) – Factory gate prices in the euro zone declined for the third consecutive month in March, a sign that the common currency bloc continues to experience a period of low inflation that could hamper its recovery.
Producer prices dropped 0.2 percent in March from the prior month, according to a report by the European Union’s statistics agency released Monday. Prices fell 1.6 percent year over year, a lesser decline compared with the 1.7 percent fall in the previous month.
The continuing slide in producer prices indicates that consumer prices are unlikely to accelerate rapidly in the next several months. Last week, Eurostat said the annual inflation rate climbed in April to 0.7 percent from 0.5 percent, still well below the 2.0 percent target by the European Central Bank (ECB). The increase was boosted by Easter spending on items like holiday travel.
The rise in inflation and indications that the euro zone’s economy has gained some momentum in recent months have prompted many economists to predict the ECB will maintain its current monetary policy when its officials meet Thursday.
The fall in producer prices was largely due to the 0.9 percent cut in prices by energy suppliers in February. But factory-gate prices stayed flat on the month even if energy was excluded.