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Economy in Brief

· The Euro area 13 PPI rose by 0.3% in February. Excluding energy the rise was 0.3% as well. Trends show that PPI inflation pressures are elevated. And while the PPI is not the main focus of ECB policy, the pressure on prices is widespread across main EU countries. The bank of England has even recently said it was going to look beyond headline inflation as legacy issues might damp that calculation in the coming months. Central banks are becoming more concerned about embedded inflation pressures.
Euro area and UK PPI Trends
  M/M SAAR
Euro area 13 Feb-07 Jan-07 3-Mo 6-MO Yr/Yr
Total (Excl Construction)  0.3% 0.2% 2.1% 0.2% 2.9%
   Excl Energy 0.3% 0.5% 3.4% 2.7% 3.4%
Capital Goods 0.1% 0.5% 2.9% 2.3% 2.0%
Consumer Goods 0.2% 0.3% 2.4% 1.2% 1.6%
Intermediate & Capital Goods 0.3% 0.6% 3.9% 3.4% 4.4%
Energy 0.4% -0.7% -1.8% -7.5% 1.0%
Manufacturing 0.4% 0.1% 2.3% -0.4% 2.5%
Germany 0.3% 0.0% 1.0% 0.3% 2.8%
  Excl Energy 0.3% 0.2% 2.2% 2.4% 3.0%
France 0.3% 0.1% 1.1% -0.7% 2.0%
  Excl Energy 0.2% 0.5% 2.2% 1.9% 2.8%
Italy 0.4% 0.0% 2.4% 0.2% 4.0%
  Excl Energy 0.3% 0.6% 4.3% 3.0% 4.2%
UK -0.8% -1.4% -6.7% 1.4% -1.4%
  Excl Energy 0.4% 0.5% 3.7% 3.1% 3.4%
Euro area 13 Harmonized PPI excl Construction.
The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain
6COLSPAN
Euro Area and UK PPI Trends
by Robert Brusca April 3, 2007

Trend across categories and countries do not show a steadily accelerating inflation rate that central banks would clearly abhor. But they do show that pressures that had dissipated have re-emerged in the 3-month inflation rates. Excluding energy, inflation trends across the main countries show the same tendency except in Germany and in France where the pace of PPI ex-energy inflation is staying fairly constant, just above the 2% pace.

The headline inflation rate is moving steadily lower, but ex-energy inflation is considerably more stubborn around 3.5%, well above the ECB ceiling rate of 2% (for the HICP).

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