GOTHENBURG, Sweden, Oct 2 (Reuters) - Prices at factory gates in the 16-country euro zone rose as expected in August against July on the back of higher oil costs, but they fell in annual terms, data showed on Friday.
Industrial producer prices rose 0.4 percent month-on-month after a revised 0.7 percent fall in July, the Luxembourg-based European Union statistics office said. They fell 7.5 percent year-on-year, following July's revised 8.4 percent drop.
Economists polled by Reuters had on average expected the monthly increase but had forecast the annual decline to be slightly larger, at 7.6 percent.
More expensive oil served as the main reason behind the monthly rise as energy costs gained 1.5 percent against July, although they were 16.9 percent lower than in August 2008.
Producer prices are important to the European Central Bank because they show inflationary pressure, or the reverse, early in the pipeline.
The ECB aims to keep annual consumer price inflation just below 2 percent but it was at -0.3 percent in September, the fourth straight month of falling prices.
Economists expect the bank to keep its main interest rate unchanged at the current record low of 1 percent until the third quarter of next year. (Reporting by Jan Strupczewski; Editing by Dale Hudson)