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Economy in Brief

Several Nations' CPI's Remain Moderate Despite Rapidly Rising Energy Costs
by Carol Stone July 14, 2005

Several countries reported June CPI today, and the results generally suggest that overall inflation remains quiescent. Prices in both Germany and Italy were flat after a 0.3% rise in May, and year-on-year rates four of the six reporting countries, which also include Spain, Finland, New Zealand and the US, remain at or below their pace during 2004.

Inflation is always of interest, but all the more presently because of the surge in energy prices. So we keep checking to see if there has been an acceleration in overall inflation or, if available, in the overall rate excluding energy. This latter is important for showing whether higher energy costs are being pushed through to the prices of other goods and services. In the three countries for which a total excluding energy is published, Germany, Spain and the US, this year/year rate was lower in June than it had been six months ago.

In this same time-period comparison, the 12-month percent change in June versus that for December 2004, we can discern differing trends in non-energy sectors that might help us understand how this moderate inflation is being sustained. Clothing prices are weak in almost every country, and in the places where they are not slowing, they are moving evenly with 2004's pace. Communications prices continue to decline outright, though less rapidly in some countries. Health care costs -- at least the portion covered here, the part consumers actually pay -- are generally rising at about the same rate. Food and household goods prices are mixed among the various reporting countries. Thus, apart from the clothing sector, where weakness is widespread, there is no systematic pattern of price change among the categories and the countries. This randomness is probably beneficial to the prevention of a general acceleration of prices, since it indicates considerable resistance to higher prices in disparate places in the world.

% Changes
Yr/Yr calculated from NSA
June 2005 May 2005 Year/ Year
2004 2003 2002
Germany (SA) 0.0 0.3 1.8 3.3 1.9 2.4
  ex Energy (SA) -0.2 0.4 1.0 1.7 1.0 0.9
Spain (NSA) 0.3 0.2 3.2 3.2 2.6 4.5
  ex Energy (NSA) 0.1 0.3 2.6 2.7 2.9 4.3
Italy (NSA) 0.0 0.3 1.8 2.0 2.5 2.8
Finland (NSA) 0.3 -0.3 1.1 0.4 0.6 1.7
New Zealand (NSA) 0.9*   2.8 2.7 1.6 2.7
Memo: US (SA) 0.0 -0.1 2.5 3.3 1.9 2.4
  ex Energy (SA) 0.1 0.2 2.1 2.2 1.5 1.8
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