Euro zone producer price falls decelerate in November

BRUSSELS (Reuters) - Euro zone producer prices eased as expected month-on-month in November, but the pace of decline decelerated for the third month in a row as the downward pull from cheap energy lessened, European Union statistics office data showed.

Eurostat said prices at factory gates in the 19 countries sharing the single currency fell by 0.2 percent in November from October for a 3.2 percent year-on-year decline.

Economists polled by Reuters had expected a 0.2 percent monthly fall and a 3.1 percent annual drop.

In October, the monthly producer price fall was 0.3 percent, in September 0.4 percent and in August 0.8 percent, driven by energy price declines of 0.5, 0.9 and 2.7 percent respectively.

In November, energy prices were down by 0.3 percent.

Without energy costs, the monthly producer price index has been unchanged at -0.2 percent in August, September, October and November, while the year-on-year reading was -0.7 percent in November and October, -0.6 percent in September and -0.5 percent in August.

Producer prices eventually translate into consumer inflation because they are passed on to consumers unless wholesalers and retailers absorb the changes in prices at factory gates by adjusting their own profit margins.

The European Central Bank wants to keep consumer inflation below but close to 2 percent over the medium term and is buying government bonds on the market to inject more money into the economy to accelerate price growth. Inflation in December was only 0.2 percent.

(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)

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