EUROZONE DATA: EZ PPI Higher Than Expected

Eurozone PPI was a touch higher than expected in July at -2.1% Y/Y (vs -2.5% consensus, -3.3% revised prior), on a sequential basis the 0.8% M/M reading was also firmer than expected (vs 0.3% consensus, 0.6% revised prior).

• The headline Y/Y print was less negative largely due to the energy component seeing it's fifth consecutive increase to -6.9% Y/Y (vs -9.6% prior), after a second consecutive monthly rise (2.8% M/M vs 1.8% prior).
• Intermediate goods also remained in Y/Y deflation although outright deflation continued to moderate to -1.2% vs -2.3% prior.
• On the other hand, capital goods, durable and non-durable consumer goods continue to see producer prices increase on an annual basis - albeit at a softer pace than seen in June.
  • Specifically, capital goods PPI  was 1.4% Y/Y (vs 1.6% prior), whilst durable consumer goods inflation decelerated four tenths to 0.3% Y/Y, and non-durable consumer goods inflation fell one-tenth to 1.0% Y/Y. Despite the upside surprise to the headline PPI print, with consumer goods inflation still soft, it suggests there may be potential for non-energy industrial goods to remain soft in near-term HICP readings.