Euro-zone Producers Price Index rose by 2.7 per cent in August on yearly terms, up from a revised 1.6 per cent increase in July, the highest since March 2012. At the same time, the PPI Prices monthly increased by 0.9 per cent in August up from a revised 0.3 per cent increase in July, according to the Eurostat. The monthly PPI prices increased more than the expected 0.5 per cent increase as well as annually rose more than the anticipated at 2.6% .
The annual PPI 6-month new high could be an early indication of consumer prices increase. Early indication of rising CPI means that inflation is moving further away from ECB’s target and reducing chances of a rate cut. The single currency against the US dollar was volatile after the release however remained unchanged as the effects of the higher PPI are not yet clear, EURUSD was lastly seen at 1.2912.