A jump in energy prices pushed up euro zone producer prices by a larger-than-expected 0.6 percent in May from April, the European Union's statistics agency said on Friday. On an annual basis, May prices at factory gates throughout the 12-nation bloc were up by 2.4 percent, the fastest pace since February 2003, Eurostat said, pointing to continued pressure on inflation in months to come. Both the monthly and annual rise were above expectations. Economists polled by had looked for a 0.5 percent rise in May producer prices for a year-on-year rise of 2.2 percent. Energy prices rose by 2.3 percent in May from April for an annual rise of 5.5 percent reflecting the surge in oil prices.
Although oil prices have retreated from 21-year highs reached in early June, the European Central Bank on Thursday said markets expect them to remain high for some time and it was less optimistic that inflation would quickly ease to its upper limit of 2.0 percent. "We will probably be in the short term higher than two percent until the end of the year, even higher than two percent (in) part of the first semester of next year," ECB President Jean-Claude Trichet said. In addition to the pressure from higher oil prices, Trichet also cautioned that strong global growth was putting upward pressure on commodity prices, another upward risk to price stability. Excluding the energy sector and construction, Eurostat said producer prices were up by 0.1 percent in May for an annual rise of 1.6 percent.///