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Economy in Brief

PPI Inflation Trends Continue Strong in the Euro Area
by Robert Brusca July 2, 2008

The charts show that trends in the PPI are still working their way higher. The table shows that energy and manufacturing sector inflation trends as well as the total excluding construction embody accelerating trends. Headline inflation is accelerating in Germany, Italy, France and the UK. Core inflation is accelerating steadily in those countries too, except for France and Germany. In Germany core inflation accelerated over 6-mo compared to 12 months then leveled off at 4%. In France Inflation accelerated to 4.2% over six months from 3.5% over 12-months then backed off to 4% over three-months. So countries where the core is not accelerating are not showing much in the way of hopeful trends either.

None of these inflation rates is acceptable to the ECB. For the PPI even core inflation rates are running DOUBLE the ceiling that has been set for headline HICP inflation rate. No wonder the ECB is widely believed to be readying a rate hike.

Euro Area and UK PPI Trends
  M/M Saar
Euro Area 13 May-08 Apr-08 3-Mo 6-MO Yr/Yr Y/Y Yr Ago
Total excl Construction 1.2% 0.9% 11.7% 9.2% 7.1% 2.4%
Excl Energy 0.3% 0.4% 4.5% 4.9% 3.8% 3.2%
Capital Goods 0.2% 0.2% 2.2% 2.7% 1.8% 2.0%
Consumer Goods 0.1% 0.2% 2.6% 3.8% 4.5% 1.7%
Intermediate & Capital Goods 0.4% 0.5% 5.5% 5.5% 3.4% 4.1%
Energy 4.1% 2.1% 36.7% 23.7% 18.2% -0.1%
MFG 1.3% 0.6% 11.2% 8.0% 6.3% 2.6%
Germany 1.0% 1.1% 11.6% 8.8% 6.0% 1.9%
Germany Ex Energy 0.4% 0.4% 4.0% 4.0% 2.9% 2.7%
France 1.3% 0.8% 11.0% 7.9% 6.7% 1.8%
France Ex Energy 0.3% 0.4% 4.0% 4.2% 3.5% 2.7%
Italy 1.5% 0.4% 11.9% 9.2% 7.5% 3.0%
Italy Ex Energy 0.2% 0.5% 5.5% 5.3% 3.8% 3.7%
UK 1.7% 2.3% 21.1% 17.9% 16.5% 0.2%
UK Ex Energy 1.2% 1.0% 11.8% 9.7% 6.3% 3.2%
Euro Area 13 Harmonized PPI excluding Construction
The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia
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