Eurozone’s PPI Rises in February: Will CPI Follow Suit? - Forex News by FX Leaders
Eurozone's PPI Rises in February: Will CPI Follow Suit?

Eurozone’s PPI Rises in February: Will CPI Follow Suit?

Posted Thursday, April 8, 2021 by
Arslan Butt • 1 min read

Producer prices across the Eurozone grew at a faster pace during February, supported by an increase in prices for energy and intermediate goods, and raises hopes for an improvement in consumer prices in the near future. Data released by the Eurostat reveals that Eurozone’s factory gate prices rose by 1.5% YoY and by 0.5% MoM in the month of February.

Eurozone’s PPI surged in February on the back of a spike in energy costs, which rose by 2.3% YoY during the month after weakening for the past several months. Meanwhile, prices for intermediate goods increased by 2.4% YoY in the month, higher than the 1% increase seen during the previous month.

PPI is a key indicator of upcoming trends in CPI as higher factory gate price are typically passed on to consumers via increased cost for finished goods. As a result, higher PPI typically signals an uptick in consumer inflation in the near term.

Consumer prices across the Eurozone rose by 1.3% during March, coming in closer to the ECB’s 2% target for inflation, but it remains to be seen whether the reading was a temporary spike or would sustain a longer trend. The ECB has already cautioned of higher inflation in the coming months as economic recovery from the coronavirus crisis gathers pace, on account of pent-up demand among consumers.

 

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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