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Euro zone producer prices fell in November for the fourth consecutive month but their drop was slower than in October and smaller than expected, official estimates showed on Monday.

The European Union’s statistics agency Eurostat said prices at factory gates in the 19 countries sharing the euro dropped by 1.4 per cent on the year in November, after a 1.9 per cent plunge in October.

Economists polled by Reuters had forecast a 1.5 per cent fall on the year in November.

The slowdown in industry deflation was mostly caused by a less prominent fall in energy prices, which declined by 6.1 per cent in November after a 7.7 per cent drop in October.

Without that volatile component, industrial producer prices rose 0.3 per cent in November, the same rate as in October.

Prices of non-durable consumer goods, such as clothing, went up by 1.7 per cent on the year. Durable consumer goods, like fridges or cars, recorded a 1.6 per cent inflation at factory gates.

On the month, overall industry prices rose by 0.2 per cent in November after stalling in October.

Producer prices signal inflationary pressure early in the pipeline because, unless absorbed by intermediaries and retailers, changes are transmitted to the final consumer, impacting headline inflation.

The European Central Bank wants to keep consumer inflation below, but close to 2 per cent over the medium term, but has struggled to accelerate price growth for years despite programmes of government bond buying on the market.

Euro zone headline inflation accelerated to 1.0 per cent in November and economists polled by Reuters expect it to rise further to 1.3 per cent on the year in December. Eurostat will release its preliminary estimates for December on Tuesday.

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