Mixed signals on inflation as producer prices decrease – but non-energy components are on the rise

Europe’s industrial price index, typically seen as an indicator of future consumer inflation, is decreasing on the back of lower energy prices.

While this might spell good news for the continent’s inflation expectations, it is worth noting that every other non-energy component is still rising.

In January 2023, industrial producer prices fell by 2.8 per cent in the euro area and by 2.2 per cent in the EU, compared with December 2022, according to estimates from Eurostat, the statistical office of the European Union.

In December 2022, prices increased by 1.1 per cent in the euro area and by 1.2 per cent in the EU.

In January 2023, compared with January 2022, industrial producer prices increased by 15 per cent in the euro area and by 16.4 per cent in the EU.

Monthly comparison by main industrial grouping and by Member State

Industrial producer prices in the euro area in January 2023, compared with December 2022, decreased by 9.4 per cent in the energy sector, while prices increased by 0.8 per cent for intermediate goods, by 1.2 per cent for capital goods, by 1.5 per cent for non durable consumer goods, and by 1.6 per cent for durable consumer goods.

Prices in total industry excluding energy increased by 1.1 per cent.

In the EU, industrial producer prices decreased by 7.9 per cent in the energy sector, while prices increased by 0.8 per cent for intermediate goods, by 1.2 per cent for capital goods, by 1.4 per cent for non durable consumer goods, and by 1.5 per cent for durable consumer goods.

Prices in total industry excluding energy increased by 1.1 per cent.

The largest monthly decreases in industrial producer prices were recorded in Ireland (-25.2 per cent), Sweden (minus eight per cent) and Latvia ( 5.8 per cent), while the highest increases were observed in Slovakia (plus nine per cent), Czechia and Hungary (both +5.8 per cent) and Austria (+4.9 per cent).