Jan 7, 2020 - Economy

Eurozone producer prices sink again

Data: FactSet; Chart: Andrew Witherspoon/Axios
Data: FactSet; Chart: Andrew Witherspoon/Axios

The continued decline in prices paid by manufacturers could be a major impediment to European policymakers' desire for higher inflation in the eurozone, and data released Monday shows things are not improving.

What happened: The producer price index for the eurozone fell for the fourth straight month in November.

  • The decline was less than economists expected, but still showed a more than 1% drop after a nearly 2% fall in October.

Why it matters: The European Central Bank has cited lagging inflation as a major risk to growth and stability in the region and inflation's inability to rise to the central bank's 2% target as a reason for increasing its bond-buying program and cutting interest rates late last year.

  • Headline inflation moderately improved to 1% in November and economists expect it rose further to 1.3% in December, but the consistent drag from producer prices may inhibit that.

What's next: Eurostat will release its preliminary PPI estimate for December today.

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