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Economy in Brief

Consumer Prices Remain Restrained through March in Europe & Canada
by Carol Stone April 20, 2006

In March, consumer price inflation in Europe and North America eased or remained steady. Core inflation is also quiescent.

For the Euro-Zone12, the total CPI was up just 2.2% from a year ago, less than in 2005 and 2004. The core rate, which excludes food, energy, alcohol and tobacco, was a mere 1.3%; this is up very slightly from February and January, but equal to or lower than the last few years.

UK inflation is holding below 2.0% as March's figure eased 0.2% from February to 1.8%. Its core rate was also 0.2% lower, at 1.2% from 1.4% and for all of last year, 1.3%.

Incredibly, Austria's CPI has risen only 0.8% over the past year. In that country, health costs, transportation and communications, and education and recreation costs are all running slower; this is a fairly diverse group, indicating that no single factor is responsible for the slow pace.

Canada's CPI has been running just above a 2% trend for about three years. Its core, defined to exclude just food and energy, is edging a bit higher, but at 1.5% in March, is still quite temperate.

Finally, it is interesting to note that the high-inflation nation here is the US, with a year-on-year rate of 3.4% and the core at 2.1%. Yesterday, Tom Moeller described the month-to-month changes, which showed gains in a couple of categories coming off declines in February. Even so, the 12-month rate actually eased, similar to other countries, and the core rate was steady at 2.1% for a third straight month. Notably, the BLS has started to compile US CPI using the same structure as the Europeans, the so-called "harmonized index of consumer prices" or "HICP". On this basis, US inflation is higher still, at 3.7% in March, but it is no worse than 2005's similar number or 2004's 3.5%.

We continue to monitor these CPIs around the world for evidence that energy costs are pushing up other non-energy prices. So far, while it may "feel" to some of us, as consumers, that "things" are getting more expensive, the data everywhere show remarkable moderation in pricing of non-energy goods and services.

NSA, Yr/Yr % Changes Mar 2006 Feb 2006 Jan 2006
2005 2004 2003 2002
Euro-Zone12 2.2 2.4 2.4 2.3 2.3 2.0 2.4
  Core* 1.3 1.2 1.2 1.3 1.9 1.6 2.2
UK 1.8 2.0 1.9 1.9 1.7 1.3 1.7
  Core* 1.2 1.4 1.2 1.3 1.3 0.9 1.8
Austria 0.8 1.2 1.2 1.5 2.9 1.3 1.8
Canada 2.2 2.2 2.8 2.2 2.1 2.0 3.9
  Core** 1.5 1.4 1.4 1.3 1.4 1.0 3.9
US 3.4 3.6 4.0 3.4 3.3 1.9 2.4
  Core** 2.1 2.1 2.1 2.2 2.2 1.1 1.9
  HICP 3.7 4.0 4.5 3.7 3.5 1.8 2.2
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