Data released yesterday by Eurostat, highlights a decline in industrial production of 0.6 percent in the euro zone when comparing May 2008 to May 2007.

Fall in production of consumer goods

The production of consumer goods seems to be particularly badly hit suggesting that lower consumer spending may be having a marked effect on industry.

According to Eurostat, the production of non durable consumer goods, such as cosmetics and food, fell by 3.2 per cent between May 2007 and May 2008 in the euro zone.

The figure is slightly less, 2.8 per cent, when calculated for the twenty seven countries making up the union.

Furthermore, the production of durable consumer goods also fell by 5.2 per cent in the Euro zone and by 2.6 per cent in the Euro 27.

In addition, the office of statistics released monthly data comparing May 2008 to April 2008 and similar declines were recorded.

Industrial production only increased in a handful of member states and some of the biggest declines were registered in some of the leading economies.

Germany, one of Europe's largest industrial economies, registered a 2.6 per cent drop in May's industrial production.

Rising cost of oil also leads to price rises

The last few months have seen growing numbers of chemical companies that supply the cosmetics industry increasing prices, causing more headaches for the industry.

Last week Germany-based giant Symrise was one of the first active ingredients supplier to increase its prices.

Until now it has been the big chemical and raw ingredients suppliers such as Dow, BASF and Sun Chemicals that have been linked to price increases that exceed the 10 per cent barrier.

However, now those price increases are being passed further down the chain to refined and active ingredients players like Symrise, and others are likely to follow suit as oil prices continue to rise.