Prices paid by producers registered another sharp fall in December amid plummeting energy prices, data published by Eurostat showed last week.
Producer prices fell by 10.6 per cent year-over-year in December, surpassing November’s 8.8 per cent fall. Economists had predicted producer prices to fall by 10.5 per cent. Excluding energy, the producer price index only logged a 0.4 per cent decline for the month.
The data showed that energy prices nosedived by 27.5 per cent from 23.9 per cent in the prior month. On a country-by-country basis, Ireland recorded the highest monthly decrease in producer process, with a fall of 12 per cent, followed by the Netherlands, where a drop of 1.8 per cent was recorded.
Meanwhile, in the UK, house prices rose for the fourth month in a row in January, reaching their highest level since October 2022, adding to signs that the British real estate market is stabilising as the cost of mortgages fall.
A survey by Lloyds Bank subsidiary Halifax and S&P Global showed that house prices increased by 2.5 per cent year-on-year for the month of January, which was the biggest increase since January last year, as abating inflationary pressures led to increased buyer and seller confidence.
The Bank of England is likely to lower interest rates in the coming months, though the timing of any cuts is yet unknown. Lower interest rates may support housing market activity in future months.
Finally, mirroring weakness in the key manufacturing sector of Europe’s largest economy, Germany’s industrial production fell more than forecast in December, logging the seventh consecutive month of declining output.
Industrial production in Europe’s largest economy fell by 1.6 per cent in December compared with the previous month. This exceeds analysts’ expectations of a 0.4 per cent fall.
In 2023, Germany’s industrial production shrank by 1.5 per cent compared to the previous year, with lower energy production, which was down 15 per cent.
According to Franziska Palmas, economist at Capital Economics, production will continue to fall amid high energy costs and weak domestic and external demand.
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