The latest report from Eurostat, the European Union’s statistical office, showed that the Producer Price Index (PPI) in the eurozone decreased by 2.8% in January. The PPI measures inflation driven by producer spending.
While the PPI rose by 15.0% on a year-over-year basis, it slowed down from the 24.5% increase recorded in December. Analysts had previously predicted a monthly fall of 0.3% in the PPI in January and a year-on-year rise of 17.7%.
The drop in PPI during January was attributed to falling energy prices. Excluding energy, the core PPI grew by 1.1% in January and increased by 11.1% year-on-year.
The change in PPI indicates the trend of the Consumer Price Index (CPI), as manufacturers tend to pass on the burden of rising prices to consumers. The European Central Bank (ECB) has set a 2% inflation target.
The latest figures indicate that inflation in the eurozone may not be as significant as anticipated. However, rising energy costs may trigger an increase in PPI in the coming months. The ECB will continue to monitor these developments closely as it seeks to maintain price stability in the eurozone.