Producer prices in the eurozone industrial sector rose 5.9% year-on-year in May, significantly outpacing market expectations, according to data released by Eurostat on Monday.
The sharp acceleration was primarily driven by surging energy costs stemming from the ongoing Iran conflict, which has disrupted supply chains and pushed input prices higher across the region.
2% in May—the sharpest annual increase in over a year—this new producer price index (PPI) reading suggests that cost pressures are intensifying further upstream.
The data underscores the persistent inflationary pressure on the supply side of the European economy.
While consumer prices had already accelerated to 3.2% in May—the sharpest annual increase in over a year—this new producer price index (PPI) reading suggests that cost pressures are intensifying further upstream.
The jump in industrial prices indicates that businesses are facing higher costs for raw materials and energy, which may eventually filter through to consumer prices if margins cannot absorb the shock.
The surge in producer prices comes amid a backdrop of elevated fuel costs, with diesel and gasoline prices in the European Union having jumped significantly in recent months.