ROME, April 2 - Italian producer prices rose 0.4 percent in February from January, in line with expectations, as higher international oil prices continued to spark the index, national statistics agency Istat said on Wednesday. The price of goods leaving Italian factory gates -- a key indicator of future consumer inflation -- rose 2.8 percent from a year ago. Analysts polled by had forecast exactly the same average month-on-month and year-on-year gains for February. The key driver of accelerating factory gate prices in February was the rise in oil prices ahead of the U.S.-led attack on Iraq.
Energy accounts for about five percent of the basket of goods used to calculate Italian PPI, and economists said the euro-denominated price of crude oil has jumped about 4.9 percent since January. In February's producer price index, oil products rose 3.8 percent from January and 13 percent from the same period a year earlier. Istat said that stripping out oil products and utilities meant producer prices had actually only risen 0.1 percent month-on-month and 1.6 percent year-on-year. With the growing threat of a longer-than-expected war in Iraq, prices are likely to stay buoyant on the back of continuing upward pressure on oil prices. "Unless oil prices ease rapidly, we expect to see further pressure on (the) PPI," warned Kleopatra Nikolaou, an analyst at 4Cast in London.
At the same time Italian industrial production stagnated, further postponing hopes for an upturn and making it hard for producers to try to pass higher prices onto the gloomy consumer. "Pipeline inflation is now below PPI levels for the first time since April 2001," added Nikolaou. Preliminary March inflation data released on Monday showed inflation rising 2.7 percent year-on-year. But Italy is not the only one affected by continuing producer price pressures. On Friday data is expected to show that oil was once again the main culprit behind rising producer prices in the euro zone. Analysts forecast euro zone producer prices rising 0.4 percent month-on-month, from 0.8 percent in January, and a 2.4 percent year-on-year rise from 2.0 percent.//www.reutwrs.com