Eurozone Factory Price Inflation Slows Down in February

Eurozone's industrial producer-price inflation has slowed significantly in February, reflecting reduced inflationary pressures in the region.

The European Union's (EU) official statistics body Eurostat said factory prices in the 17-nation euro area rose by 0.2 percent on month in February as against the revised data of 0.4 percent rise recorded in the previous month.

Prices in total industry, excluding the energy sector, have increased by 0.1 percent on month in February, while prices in the energy sector gained 0.4 percent during the month. Capital goods, durable consumer goods and non-durable consumer goods gained by 0.1 percent, while intermediate goods remained stable.

On a year-on-year basis, factory prices increased 1.3 percent in February, a seven-month low, as energy costs declined. Analysts expected a 1.5 percent on-year increase for the month. Eurostat also revised down the producer price inflation data for January from 1.9 percent year-on-year to 1.7 percent.

Excluding the energy sector, prices in the total industry rose 1.2 percent year-on-year in February, while prices in the energy sector rose by 1.6 percent. Nondurable consumer goods gained 2.3 percent, capital goods increased by 0.8 percent, and intermediate goods and durable consumer goods rose by 0.7 percent.

The latest producer price index that helps to predict rises or falls in consumer prices is adding to the signs that the euro region's inflationary pressures are easing.

The situation provides room for the ECB to consider an interest rate cut when it meets during the day. At present, the interest rates are kept at 0.75 percent, while the closely watched inflation figure for the euro region remains below the target of 2 percent.

Despite eased inflationary pressures, economists widely expect the ECB to hold the key interest rate unchanged at the record-low of 0.75 percent.

Inflation in the eurozone was skyrocketed in 2013 on high oil prices, in spite of the recession in the region.