Prices paid at factory gates in the 17 countries that share the euro jumped in the first month of the year, with soaring energy costs leading an increase that will put more pressure on the central bank to contain inflation, according to Bloomberg. On Wednesday, the European Union reported that producer-price inflation reached 6.1% in January from one year earlier, marking an acceleration of the annual rate from the 5.3% inflation recorded the month prior. The jump surprised economists who had been expecting a 5.7% annual increase, and the reported amount marks the highest level since September 2008.
The jump has been driven by rising energy costs, which were up 13% fin January year-over-year, with crude oil seen 33% higher in the last six months alone, which is pushing companies to pass on higher prices to consumers. The consumer price index was 2.4% higher year-over-year for the eurozone, which is increasing pressure on the European Central Bank to raise interest rates to keep inflation within its “at or just below 2%” target. Aline Schuiling of ABN Amro Bank said, “Given surging oil and food prices, we are likely to see a further acceleration in inflation in the coming months.” Schuiling also warned that the bank may move on interest rates sooner than forecast.