Euro zone producer prices suffered their steepest fall since the 2008 financial crisis in March, data showed on Tuesday, dropping by more than expected as the Covid-19 pandemic sharply reduced demand for energy.
The European Union’s statistics office Eurostat said prices at factory gates in the 19 countries sharing the euro fell by 1.5 per cent month-on-month in March for a 2.8 per cent year-on-year decline.
The former was the steepest decline since November 2008. Economists polled by Reuters had expected drops of 1.3 per cent for the month, and 2.6 per cent year-on-year.
Producer prices show inflationary pressure early in the pipeline because unless their changes are absorbed by retailers and intermediaries, they directly affect the final price for consumers.
Energy prices tumbled 5.5 per cent on the month and by 11.3 per cent year-on-year in March pulled down by the oil-price war between Russia and Saudi Arabia and falling demand for fuel as economies around the world ground to a halt because of the pandemic.
Without the volatile energy component, industrial producer prices fell only 0.2 per cent on the month and were 0.2 per cent higher year-on-year. – Reuters