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Economy in Brief

Spain's PPI Surges
by Robert Brusca August 25, 2008

Not that SPAIN is an inflation bellwether but a 23-year high is a 23-year high -- Soaring energy costs sent Spanish producer price inflation to a 23 ½ year high of 10.1 percent in July. Many are calling this the peak in inflation. With energy prices as the culprit and world energy prices having moved off-peak, that bet seems a good one. Inflation in Spain, as in the rest of Europe, has been propelled by a 30 percent rise in energy prices. In July the headline rate was the greatest annual increase since November 1984 and it compared with a 9 percent rate of increase in June. Producer prices rose 1.3 percent month on month, compared to 1.4 percent in June. Since July lower consumer goods demand and a housing and credit crisis add to lower world oil prices as reasons for Spain’s inflation rate to abate.

Still e-Zoners have their lingering concerns. In Jackson Hole Wyoming as the KC Fed’s conference disbanded, Italy’s central back head Mario Draghi warned that if central banks became too preoccupied with financial stability they could lose their grip on inflation. Draghi argued that price stability was the true key to getting economies back on track. Clearly central bankers have a lot on their minds in addition to what is on their plates.

Spain PPI
  m/m Saar
SPAIN Jul-08 Jun-08 May-08 3-Mo 6-Mo Yr/Yr Y/Y Yr Ago
Total 1.3% 1.4% 1.2% 16.3% 11.1% 10.1% 2.3%
Consumer 0.1% 0.4% 0.2% 15.4% 2.9% 5.2% 1.9%
Intermediate 1.3% 0.8% 0.4% 10.1% 9.2% 7.3% 5.5%
Investment 0.3% 0.1% 0.2% 2.4% 2.1% 2.3% 3.1%
HIPPXConstruction #N/A 1.4% 1.1% #N/A #N/A #N/A 2.3%
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