Eurozone factory prices add to ECB headache but unemployment falls

[BRUSSELS] Prices at factory gates in the 19 countries sharing the euro fell by more than expected in December, in another sign of the challenges facing the European Central Bank in bringing inflation nearer to its medium-term target.

Producer prices fell by 0.8 per cent in December, compared with the previous month and by 3.0 per cent compared to the same period a year ago, the European Union's statistics office Eurostat said on Tuesday.

This was below the average expectations in a Reuters poll of 13 economists which forecast prices to drop by 0.6 and 2.8 per cent respectively.

European Central Bank President Mario Draghi has promised to increase inflation, rejecting criticism of the ECB's loose monetary policy and arguing that sluggish growth in prices was damaging the euro zone economy.

The ECB's mandate is to keep inflation just under 2 per cent a year.

In a rare piece of good news for the eurozone, shaken by years of economic stagnation and crisis, unemployment fell by more than expected to 10.4 per cent of the working population, from 11.4 per cent a year ago.

Over the past year, the number of jobless dropped in southern Europe, especially in Spain and Portugal.

In the wider European Union, unemployment was unchanged at 9.0 per cent, with the lowest levels of job seekers in the Czech Republic, Germany and Britain.

REUTERS