Euro area producer prices gain in February despite energy price drop

Factory gate prices in the euro area rose past forecasts in February despite a large drop in energy costs and in some of the bloc's largest economies.

Producer prices in the single currency area were flat in comparison to the previous month, but ahead by 4.5% on the same month one year ago, according to Eurostat.

Economists had forecast an increase of 0.1% month-on-month and a gain of 4.3% on the year.

Energy prices declined by 1.1% versus January but were more than offset by a 0.3% once they are excluded.

Prices for intermediate goods saw the steepest increase, rising by 0.6% versus January, followed by those for non-durable consumer goods which were 0.2% dearer.

The cost of capital goods and durable consumer goods meanwhile rose by one tenth of a percentage point.

By countries, prices rose by 0.2% in Germany, but were down by 1.4% in Spain and 0.2% in France.

In Italy on the other hand they were up by 0.3% and in the Netherlands by 0.5%.

Manufacturing sector PMIs for March from IHS Markit released on the same day revealed a similar split, with activity in Germany, Italy and the Netherlands bounding ahead of that in Spain and France.

That led the survey compiler to caution: "the survey is also signalling the highest incidence of supplier delivery delays for nearly six years, underscoring how suppliers are struggling to meet surging demand.

"These delays send a warning signal about rising inflationary pressures, as busy suppliers are often able to hike prices. Prices charged for goods leaving the factory gate are consequently rising at the fastest rate since mid-2011, despite March seeing a drop in the price of oil and a stronger euro against the US dollar, as supplier price hikes are passed on to customers."