Market Overview

Euro area PPI passed 30% mark

Euro area producer prices accelerated their rise in January – a significant early signal of a further increase in consumer inflation. A fresh Eurostat report showed that PPI rose by 5.2% in the first month of the year, twice as much as expected and by 30.6% to the same month a year earlier.

Until the middle of last year, the year-over-year growth rate had not exceeded 10% in the indicator’s 40-year history. However, the combination of a low base and subsequent supply-chain disruptions for some commodities and energy are feeding this wave.

The latest spike in gas prices and Brent’s jump by a third since the start of February indicates that price pressure promises to remain extremely high next month.

A couple of months ago, this would have been good news for the euro, as markets would have reinforced expectations of policy tightening. Now the figures point to a looming inflationary horror in the eurozone, which the ECB is unlikely to tackle in order not to multiply the region’s economic shock.

The FxPro Analyst Team

Article Rating
Rate this post