Europe producer prices drop 1.8 pct

Bloomberg

Factory-gate prices in the euro region fell 1.8 percent from the year-earlier month, the most since April 1999, the European Union’s statistics office in Luxembourg said yesterday. Economists had forecast a 1.5 percent decline, according to the median of 21 estimates in a Bloomberg News survey. Retail sales dropped for a ninth month, a separate report showed.

The deepening of the global slump and a 60 percent drop in oil prices from a July record have eased inflation pressures across the euro area. The economy may shrink as much as 4.1 percent this year, according to the Organization for Economic Cooperation and Development, while an EU survey showed this month that consumers’ and manufacturers’ price expectations are at a record low.

"It’s not just food and energy, we’re see evidence of a slowdown in other components," said Luigi Speranza, an economist at BNP Paribas in London. "In term of manufacturing goods there is still downward pressure which will become more evident at the consumer level over the next few months."

From the previous month, producer prices fell 0.5 percent in February. The monthly decline in January was revised to 1.1 percent from 0.8 percent.

Retail sales fell by a record 4 percent in February from the same month a year earlier, exceeding a 2.5 percent decline economists had forecast in a Bloomberg survey. The drop is the biggest since data were collected in January 1996.

Consumer-price inflation in the euro area slowed to a record low 0.6 percent last month, according to an estimate published on March 31. In Spain, consumer prices declined from a year earlier for the first time ever.