Italy producer prices post first annual drop in over two years

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By Alberto Chiumento and Chiara Scarciglia

May 30 (Reuters) -Italian industrial producer prices (PPI) fell in April from a year earlier, the first annual decline since January 2021 as energy costs decreased sharply, data showed on Tuesday.

On a month-on-month basis, the PPI posted a fourth consecutive drop, national statistics bureau ISTAT reported.

Prices at factory gates were down 4.8% in April from the month before, after dropping by 1.5% in March, while they fell 1.5% year-on-year, compared with a 3.8% rise in March.

"Sharp declines in the domestic market of electricity and gas supply prices contributed to the deflationary path," ISTAT said.

Producer prices are sometimes an early indication of trends in consumer price inflation, which in Italy stood at 8.7% in April, down from a peak of 12.6% in November, but still morethan four times the European Central Bank's 2.0% target over the medium term.

In the manufacturing sector, prices for coke and refined petroleum products continued the year-on-year decreasing trend, as well as those for metal products, ISTAT said.

Excluding energy, prices were flat on a monthly basis and grew 4.2% annually, slowing from a 6.2% rate in March.

"The weakness seen in the PPI will put some downward pressure on consumer goods prices in the coming months," said Nicola Nobile, chief economist for Italy at Oxford Economics.

However, with prices in the service sector seen easing only gradually, the slowdown in the consumer price index will be "weaker and much more lagged," he added, while the industrial PPI will continue fall this year and next.

In the three months to April the overall PPI decreased 7.7% from the previous quarter, with a deeper 10.0% fall for goods produced and sold in Italy and a flat reading for those produced in Italy and sold abroad.

Additonal Reporting by Carlo Giovanni Boffa, editing by Gavin Jones


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