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Euro Zone Wholesale Inflation Rises as Expected

Reuters
Tuesday, 2 Oct 2007 | 5:10 AM ET

A fall in energy costs capped euro zone producer price growth in August despite a jump in non-durable goods, while unemployment stayed at record lows, data showed on Tuesday.

European Union statistics office Eurostat said prices at factory gates in the 13 countries using the euro rose 0.1% month-on-month for a 1.7% year-on-year gain -- exactly in line with economists' expectations.

Eurostat said euro zone unemployment remained unchanged in August at a historic low of 6.9%, also as expected.

Producer prices are an early indication of inflationary pressure because their rises, unless absorbed by retailers via lower profit margins, eventually translate into higher costs for consumers.

The European Central Bank wants to keep annual consumer inflation just below 2%.

Consumer price growth was 2.1% in September after 12 straight months at the ECB target, and economists expect price gains to stay above 2% in the second half of the year.

Producer prices for energy fell 0.7% month-on-month and 2.2% year-on-year, helping offset a 0.5% monthly increase in non-durable consumer goods prices and their 2.3% annual rise.

Prices of durable consumer goods stayed unchanged in August against July and were 1.7% higher than a year earlier.

Contact Europe: Economy

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