Surging energy costs drove euro zone factory gate prices higher in February, likely setting the seal on the European Central Bank's first interest rate rise since 2008 later this week.
The European Union's statistics office Eurostat said that producer prices in the 17 countries using the euro rose 0.8% month-on-month for a 6.6% year-on-year increase, signalling growing pressures early in the inflation pipeline.
Economists had expected a 0.7% monthly gain and a 6.7% annual rise in producer prices, which are often a precursor to changes in consumer prices.
Energy prices rose 1.2% on the month to give a 12.8% annual increase, Eurostat said. It revised down gains in factory gate prices for January to 1.3% month-on-month from 1.5% and to 5.9% year-on-year from 6.1%.
Producer price increases, unless absorbed by intermediaries and retailers, translate into higher consumer prices, annual growth of which the ECB aims to restrict to below but close to 2% in the medium term. The bank is widely expected to raise interest rates on Thursday for the first time since October 2008.
Consumer price inflation was 2.6% in March, Eurostat estimated last week, up from 2.4% in February. Economists expect consumer inflation will remain above the ECB target in 2011 and that an April 7 rate rise from a record low of 1% could be just the first of several this year.
