PPI a Tenth Softer than Exp; Further NEIG HICP Disinflation to Come?

Eurozone PPI for May remained in deflation for the twelfth successive month, although the energy component saw another increase in the Y/Y rate for the third consecutive month (entirely driven by base effects). This pushed the Y/Y PPI figure up to -4.2% Y/Y, although a tenth below consensus (vs -5.7% prior).

• On a monthly basis PPI also fell a tenth more than consensus had expected, down 0.2% (vs -0.1% consensus, -1.0% prior).
• The energy component remained in deflation at -11.4% Y/Y, the highest since April 2023, although as noted above this was driven by base effects as on a monthly basis it saw its seventh consecutive fall at -1.1% M/M.
• Intermediate goods also remained in deflation for the thirteenth consecutive month, printing -2.9% Y/Y (vs -3.9% prior). Although the pace of deflation continues to decline as the M/M reading was positive for the third successive month at 0.1% M/M.
• Meanwhile, Capital goods, durable and non-durable consumer goods saw prices increase on an annual basis, with both Capital goods and Non-durable consumer goods edging up to 1.6% Y/Y (vs 1.5% prior) and 1.1% Y/Y (vs 1.0% prior). Durable consumer goods disinflated to 0.5% Y/Y (vs 1.0% prior) - returning to the August 2017 lows. This could potentially lead to further disinflation for non-energy industrial goods in the coming months HICP readings - although at some point that disinflation would still be expected to stall.