Soaring energy costs fuelled a steep increase in euro zone producer prices in March as expected, data showed today, in yet another sign of high inflation in the single currency area.
Prices at factory gates in the 15 countries using the euro rose 0.7 per cent month-on-month, as expected by analysts, for a 5.7 per cent annual gain, the European Union statistics office said.
Eurostat also revised up by 0.1 percentage point its February producer price growth data to 0.7 per cent month-on-month and 5.4 percent year-on-year.
Core producer price inflation, a measure excluding the volatile energy and construction components, was 0.3 percent month-on-month and 3.7 per cent annually - against 0.5 per cent and 3.6 per cent, respectively, in February.
Energy prices rose 1.8 per cent from February for an annual gain of 12.7 per cent, Eurostat said, as US crude oil futures hit a new record high above $120 a barrel today.
Producer prices are an early indication of inflationary pressure because their increases, unless absorbed by retailers via lower profit margins, eventually translate into higher costs for consumers.
Euro zone inflation eased in April to 3.3 per cent year-on-year from 3.6 per cent in March, but remained well above the European Central Bank's target of just below 2 per cent.
The ECB, which has long kept its main interest rate at 4.0 per cent despite an economic slowdown in the euro zone, is worried that high food and energy prices will feed into the wider economy, especially amid demands for higher wages.
The Eurostat data showed producer prices for durable and non-durable consumer goods rose 2.5 per cent and 5.0 per cent year-on-year respectively in March.