Euro zone producer prices sink to three-month low in July

Producer prices in the Eurozone sunk to a three-month low in July, a signal that the ailing economy is still struggling to generate rising prices.

The common currency zone’s producer price index (PPI) fell steeply to just 0.1 percent in July from the 0.8 percent rise registered in June, matching analyst estimates. It is the lowest monthly reading since April.

Energy prices exerted the steepest pressure on eurozone’s producer prices, falling 0.4 percent. Excluding energy, industry price inflation was at 0.2 per cent in July.

Moreover, the producer price numbers come after headline consumer inflation disappointed in August, holding steady at 0.2 percent, the same rate as July. More worryingly for policymakers at the European Central Bank, the measure of core inflation slipped for the first time in three months.

Further, the ECB officials are expected to release their latest quarterly outlook on GDP and inflation at the Governing Council’s latest meeting next Thursday. Meanwhile, market-based inflation expectations have fallen to their lowest since July at 1.28 percent Friday.