A couple of weeks ago, we noted here that higher energy prices had failed to ignite new inflation in Italy. The same is true for some other countries, whose CPI data were reported today for March. In Poland, the seasonally adjusted CPI was absolutely flat for a second month, and the year/year increase eased to 3.4% from 3.6% in February. In Finland, the year/year pace did go up in March to 1.0%, from 0.2% in both January and February, but this remains a relatively low number. Finnish inflation has averaged 1.3% over the last five years.

In Sweden, there is almost no inflation at all, nor any sign of a pickup. The March figure was a mere 0.1% above March 2004, with the prior two months averaging a little over 0.3%, about the same as in 2004 overall.

Thus, as in the situation in Italy, which we discussed before, other prices remain weak, offsetting the pressure from energy. Clothing prices and technology-driven communications costs are low in most countries. Even fuel components themselves have slowed from their strongest pace, as seen in the second graph.

We speak of the restrained inflation as beneficial for these economies, but that remains, of course, a relative statement. As prices are held back in the face of rising fuel costs, someone's profits or incomes are being squeezed, so the outlook is still clouded by high-priced energy.