Prices paid at factory gates in the 16 countries that shared the euro in 2010 increased at the fastest rate in over two years in the last month of last year, increasing pressure on policymakers to contain inflation, according to The Wall Street Journal. On Wednesday, the European Union reported that industrial producer prices added 0.8% in December from the month before, marking the fastest monthly increase since April. The increase brought the annual price gain up from 4.5% to 5.3% in December, which is the largest annual increase recorded since October 2008.
The spike in producer prices was driven by increasing energy costs that were up 2.2% on the month and rose 11.3% year-over-year, so core prices that strip out the volatile energy component were up a more modest 0.3% on the month and 3.3% annually. However, the year-over-year core price increase still represented a 26-month high, and increases pressure on the European Central Bank to tighten monetary policy to contain price growth. Consumer prices were found 2.4% high in December, bringing inflation further above the 2% target set by the central bank. Nonetheless, the ECB is not expected to act in the near future as sovereign debts continue to threaten the region’s economic stability.