BRUSSELS, Jan 7 (Reuters) - A sharp drop in energy costs depressed euro zone producer prices more than expected in November against October, signalling low inflationary pressure and firming the case for a deep ECB interest rate cut next week.
Prices at factory gates in the 15 countries using the euro in November fell 1.9 percent month-on-month for a year-on-year rise of 3.3 percent, the European Union statistics office, Eurostat, said on Wednesday.
Economists polled by Reuters had expected a 1.0 percent monthly decline and a 4.3 percent annual rise.
Producer prices are an indication of inflationary pressure because their rises, unless absorbed by retailers via lower profit margins, are eventually passed on to consumers.
Euro zone consumer price inflation plunged to 1.6 percent year-on-year in December from 2.1 percent in November, Eurostat estimated on Tuesday.
The European Central Bank, which meets to decide rates on Jan. 15, aims for inflation in the euro zone of just below 2 percent.
The ECB has slashed rates by 175 basis points since October to the current 2.5 percent, saying inflation pressures were falling. Most economists expect it to cut again by 50 basis points on Jan. 15.
The main reason for the slowdown in producer prices was a 5.1 percent monthly drop in energy costs, which slowed their annual increase to 6.3 percent in November from 15.9 percent in October.
What some economists call core producer price inflation, which excludes energy and construction, was minus 0.8 percent on the month while its annual growth slowed to 2.3 percent from 3.2 percent in October, the data showed. (Reporting by Jan Strupczewski, editing by Dale Hudson)