Pimpettes are screaming this morning for a 50bps cut - ya right!
Europe Producer Prices Rise 3.3% as Food Costs Jump
By Fergal O'Brien
Dec. 4 (Bloomberg) -- European producer-price inflation accelerated in October to the fastest pace this year, boosted by a surge in energy costs and the biggest increase in food prices in at least 15 years.
Factory-gate prices increased 3.3 percent from a year earlier, the most since December 2006, after rising 2.7 percent in September, the European Union statistics office in Luxembourg said today. The October rate exceeded the 3 percent median forecast in a survey of 29 economists by Bloomberg News.
Crude-oil prices breached $90 a barrel for the first time in October and reached a record near $100 last month. The increase in energy costs and soaring food prices are also fueling consumer-price inflation, which rose to the highest in more than six years last month.
The figures ``serve as a stark reminder that the recent surge in euro-zone consumer-price inflation is very much food- related,'' said Martin van Vliet, an economist at ING Bank in Amsterdam. ``The data are likely to reinforce the European Central Bank's view that the outlook for inflation remains subject to upside risks.''
Food-price inflation accelerated to 7.4 percent in October from 6.1 percent the previous month, according to figures from Eurostat. That is the highest since at least January 1993. Energy prices at the producer level jumped 1.7 percent on the month and were up 4 percent from October 2006, the biggest annual gain this year.
`On the Upside'
ECB governing council member Klaus Liebscher said Nov. 29 that inflation risks are ``clearly on the upside'' and Bundesbank President Axel Weber said Nov. 23 the ECB may still raise interest rates should ``tensions'' in money markets ``progressively ease.''
Consumer-price inflation rose to 3 percent in November, pushing further above the ECB's 2 percent ceiling. Still, all 61 economists surveyed by Bloomberg News say the ECB will leave its benchmark rate at 4 percent on Dec. 6 as the fallout from the U.S. subprime mortgage slump and the euro's appreciation against the dollar threatens economic growth.
From the previous month, overall producer prices increased 0.6 percent in October, the fastest since July 2006, according to today's report.
Prices for capital goods rose 0.1 percent on the month and were up 1.5 percent from a year earlier, while the cost of non- durable consumer goods, which includes paper products, clothing and food, increased 0.6 percent in the month for an annual rate of 3.5 percent.
The core rate of producer-price inflation, which excludes energy, rose 0.4 percent on the month and was up 3.3 percent from a year earlier.
bloomberg.com |
