December 2, 2011 / 10:09 AM / 6 years ago

Euro zone PPI up less than expected in October

BRUSSELS (Reuters) - Euro zone producer prices rose less than expected month-on-month in October and core producer prices fell, data showed on Friday, as the rise in energy costs was partially offset by a drop in prices of intermediate goods.

The European Union’s Statistics Office Eurostat said prices at factory gates in the 17 countries using the euro rose 0.1 percent month-on-month in October for a 5.5 percent year-on-year gain. Economists polled by Reuters had expected a 0.2 percent monthly rise.

Without the volatile construction and energy prices, or what some economists call core producer price inflation, prices fell 0.1 percent month-on-month. Energy prices rose 0.8 percent against September and 12.4 percent year-on-year.

Producer prices are a good indication of inflationary pressures awaiting consumers, because increases in prices at factory gates are usually passed on to them.

The European Central Bank wants to keep consumer inflation below, but close to 2 percent over the medium term and expects price growth to slow in the coming months from 3 percent in October and November.

Many economists expect the bank to cut rates at its next meeting next week, with expectations that the euro zone economy will contract in the last quarter of this year and perhaps in the first three months of 2012 as well.

Reporting By Jan Strupczewski; editing by Rex Merrifield

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