Eurozone producer prices rise 11.1% in September, adding to the case for a December ECB hike
Factory-gate prices rose 2.5% on the month, as forecast, after 1.9% the month before, while consumer core inflation has yet to follow.
Eurozone producer prices rose 11.1% in September from a year earlier. Forecasts were for 10.6%, and the previous reading was 8.2%. On the month they rose 2.5%, in line with forecasts, after 1.9%.
The surprise comes on the annual figure, and it lands as the European Central Bank prepares to act. It left rates at 2.50% on October 29, and officials are ready to raise in December. JP Morgan expects an increase then and another in March 2027. According to InvestingLive, money markets price roughly 100 basis points of increases by the end of 2027.
Producer prices often feed into consumer prices with a lag, so a reading this far above forecast makes a December hike look more likely. Consumer prices are already rising. Eurostat's flash estimate puts euro area inflation at 4.0% in October, up from 3.8%, with energy up 20.8%. Core inflation, which strips out energy and food, was unchanged at 2.5%, the same as in September.
That is the gap the ECB is watching. Christine Lagarde, the ECB president, told euro finance ministers on October 8 that there is no sense of broadening prices. Philip Lane, an ECB policymaker, has said firms are not raising prices a lot this time, but that core inflation will rise, especially next year.
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