Eurozone producer price inflation shoots to near four-year high

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Inflation faced by manufacturers in the eurozone accelerated at the fastest pace in nearly four years in December, in another sign of building inflationary pressures in the single currency area.

Year on year producer prices rose by 1.6 per cent at the end of the 2016 compared to December 2015, and jumped 0.7 per cent on a month on month measure, according to figures from Eurostat. It is the highest annual figure since February 2013.

Climbing industrial prices are a good early sign of inflationary pressures building in an economy, with higher costs faced by manufacturers usually passed on to consumers.

But in a worrying sign that factories in the weakest parts of the eurozone are under the biggest cost pressures, Greece recorded the highest annual figure in the bloc at at 2.7 per cent while Portugal’s PPI hit 1.7 per cent in December.

Overall eurozone consumer price inflation hit a four-year high of 1.8 per cent at the start of the year, ramping up pressure on European Central Bank policymakers to justify their record stimulus measures nearly two years into its quantitative easing programme.

First chart via Bloomberg

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