Euro zone producer prices fell by more than expected in January because of a sharp fall in energy prices, data from the European Union's statistics office Eurostat showed today. 

Eurostat said prices at factory gates in the euro zone dropped by 1% month-on-month for a 2.9% year-on-year decline. 

It was the steepest month-on-month fall since December 2014. Economists polled by Reuters had expected a 0.7% monthly fall and a 2.9% annual drop. 

Without the volatile prices of energy, which tumbled 3.2% on the month in January and were 8.6% lower than a year earlier, producer prices were flat last month compared with December. 

Producer process are an indication of consumer price trends, because unless cushioned by intermediaries and retailers, their changes translate directly into the final prices of goods and services for consumers. 

Consumer prices in February fell 0.2% year-on-year, mainly as a result of cheaper energy. 

The European Central Bank wants to keep consumer price inflation below, but close to 2% over a two-year horizon. 

It has been printing money to buy euro zone government bonds over the last 12 months to inject more cash into the economy and accelerate price growth.  

The ECB governing council will meet on March 10 to decide if it needs to do more to increase inflation.