Eurozone Producer Price Inflation At New Record High

Eurozone producer price inflation accelerated unexpectedly to a fresh record high in July on soaring energy prices, data released by Eurostat showed on Friday, adding pressure on the European Central Bank to act forcefully against runaway inflation when policymakers meet next week.

Producer prices surged 37.9 percent year-on-year in July, following a 36.0 percent rise in June, which was revised up from 35.8 percent.

Economists had forecast the same 35.8 percent increase for July.

The upward trend in inflation was largely driven by a 97.2 percent jump in energy prices.

Excluding energy, producer price inflation softened to 15.1 percent from 15.7 percent.

Prices for intermediate goods registered a sharp growth of 21.6 percent annually in July and those for non-durable consumer goods gained 13.8 percent.

There was an increase of 7.9 percent and 9.8 percent in producer prices of capital goods and durable consumer goods, respectively.

On a monthly basis, producer prices increased at a faster rate of 4.0 percent in July, after a revised 1.3 percent rise in the prior month. The expected increase was 2.5 percent.

Producer prices in the EU27 grew 37.8 percent yearly and by 3.7 percent monthly in July.

Among member states, the highest annual increases were observed in Romania, Bulgaria, and Denmark.

With inflation readings hitting new record highs, pressure is mounting on the European Central Bank policymakers to tighten policy aggressively.

Recent comments from policymakers also suggested that they favor forceful action against runaway inflation.

The central bank is widely expected to deliver at least a 50 basis point hike in its latest policy session next week.

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