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Economy in Brief

HICP Continues to Shoot the Moon
by Robert Brusca July 31, 2008

The EMU HICP did slow from its m/m pace of last month but the headline is still moving higher. The 12-mo to 6-mo to 3-mo growth rates how that the speed of the rise is accelerating. German price trends are up-to-date and they show the same steady accelerating as for the EMU headline. Italy also with inflation updated for July shows the pace steady at just above 4% across theses same horizons.

We have no details to look at yet in the HICP. But as of last month goods prices (oil and food) were carrying trends higher whiles services prices remained subdued. At a 2.2% over three months services sector inflation actually stepped down in the last three months compared to 6-mos and 12-mos.

Through June month Core inflation was relatively well behaved at 1.3% over three months for all of EMU but still an unruly 2.5% Yr/Yr. German core inflation through June reached only 1.8% Yr/Yr and shorter time spans show it has been decelerating. Italian and Spanish Core inflation rates are above 2% for 12 months but in each case inflation has fallen over shorter horizons. For Italy core 3-Mo inflation is running at a pace below 2%; for Spain it is a slightly excessive 2.2%.

The news that the ECB says it watches the most closely is the worst (headline inflation). But the core shows some progress even if its 12-mo growth rate remains something to give the ECB pause.

Trends in EMU HICP; Flash Index
  % mo/mo % saar
  Jul-08 Jun-08 May-08 3-Mo 6-Mo 12-Mo Yr Ago
EMU-13 0.2% 0.5% 0.6% 5.1% 4.0% 4.1% 1.8%
Core #N/A 0.2% 0.2% 1.3% 2.3% 2.5% 1.9%
Goods #N/A 0.4% 0.8% 7.6% 6.0% 4.9% 1.5%
Services #N/A 0.3% 0.4% 2.2% 2.5% 2.5% 2.6%
Germany 0.3% 0.5% 0.6% 5.4% 3.2% 3.5% 2.0%
France #N/A 0.5% 0.5% 4.5% 4.0% 4.0% 1.3%
Italy 0.0% 0.6% 0.4% 4.2% 4.4% 4.1% 1.7%
Spain #N/A 0.6% 0.7% 4.9% 4.5% 5.0% 2.4%
Core excl Food Energy & Alcohol
Germany #N/A 0.1% 0.3% -0.4% 0.8% 1.8% 2.1%
France #N/A #N/A 0.1% #N/A #N/A #N/A 1.4%
Italy #N/A 0.4% 0.2% 1.9% 3.1% 3.0% 1.9%
Spain #N/A 0.3% 0.3% 2.2% 2.6% 3.4% 2.5%
Blue shaded area data trail by one month        
large image