The drop in energy prices had a dampening effect on producer prices.
(Photo: dpa)
Luxembourg Producer prices in the euro area have fallen for the first time in a long time, signaling an abating of high inflation. Manufacturers in the industry reduced their prices in May by 1.5 percent compared to the same month last year, as the statistics office Eurostat announced on Wednesday. It is the first decline since late 2020.
Economists polled by Reuters had expected a 1.3 percent decline. In April there was still a plus of 0.9 revised. Compared to the previous month, producer prices fell for the fifth time in a row – by 1.9 percent and thus as much as experts had expected at minus 1.8 percent.
Last summer, the prices that manufacturers receive for their products rose by more than 40 percent. The decisive factor was the consequences of the war between Russia and Ukraine.
In the statistics, the prices are listed from the factory gate – i.e. before the products are further processed or sold. They thus allow conclusions to be drawn about the development of consumer prices, on the development of which the European Central Bank (ECB) aligns its monetary policy.
The fact that energy prices fell by 5.0 percent compared to April 2023 had a particularly positive effect. Compared to the same month of the previous year, energy was also significantly cheaper at 13.3 percent.
Excluding the energy sector, producer prices climbed by 3.4 percent within a year. In April, this figure was 5.1 percent.
Inflation in the euro area is steadily declining thanks to falling energy prices. Consumer prices in June were only 5.5 percent above the previous year’s level. In May, inflation was still 6.1 percent, after 7.0 percent in April.
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