Euro area factory-gate prices are up 8.2% on the year but non-energy industrial goods inflation is 1.1%. Who absorbs the gap?

Eurostat's producer price estimate for August showed industrial producer prices in the euro area up 1.9% on July and 8.2% on a year earlier. Energy was the driver: up 5.6% in the month and 21.0% on the year. Excluding energy, producer prices rose 0.2% on the month and 3.4% on the year, with intermediate goods up 6.8% and non-durable consumer goods down 0.8% (full report).

The consumer side looks different. In the September flash estimate, non-energy industrial goods inflation was 1.1%, services 3.2% and the total 3.8% (report). Producer prices measure what firms charge before retailers, wholesalers and distributors add their own costs and margins. A big rise at the factory gate can reach shelves later, partly, or not at all if businesses absorb it.

We are not asking for forecasts. We would like to hear how you think about the link:

• Do you track producer prices as a lead for consumer prices, and over what lag?
• What absorbs the difference in your experience: margins, hedged input costs, contracts, exchange rates?
• Does the 3.4% rise excluding energy tell you more than the headline 8.2%?
• For the euro, do you treat a producer price jump as a risk to ECB policy, or as already in the price?

Energy inflation explained covers how an energy shock spreads.

Please share your own approach and reasoning, not calls for others to copy. Posts that promise a direction or sell signals will be removed.