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by Robert Brusca December 2, 2008
The Euro Area PPI dropped by 0.8% in October after dropping by
0.3% in September. This drop reduced the total ex-Construction
inflation rate to 6.3% Yr/Yr. Inflation
has dropped to a 4.1% pace over six months and is falling at a 5.8%
pace over three months. Ex-energy
inflation at the PPI level also fell in October. Its pace has dropped
to 3.2% over 12 months 2% over six months and minus one percent over
three months. Germany ,
Italy and the UK each saw ex-energy inflation declining in October.
Three month ex-energy inflation is also well-behaved across these three
countries, falling for two of them and flat over three months in
Germany . PPI inflation
remains quite elevated over 12 months for headline as well for
ex-energy inflation in the Zone as well as in these three key
countries. But with the economy so weak the inflation overshoot is
rightly being ignored. Prospects remain for inflation to fall further.
Economies are weakening and spot oil has fallen below $48/bbl.
| Euro Area and UK PPI Trends | ||||||
|---|---|---|---|---|---|---|
| M/M | SAAR | |||||
| Euro Area 15 | Oct-08 | Sep-08 | 3-Mo | 6-MO | Yr/Yr | Y/Y Yr Ago |
| Harmonized PPI ex Construction | -0.8% | -0.3% | -5.8% | 4.1% | 6.3% | 3.3% |
| Excl Energy | -0.4% | 0.0% | -1.0% | 2.0% | 3.2% | 3.2% |
| Capital Goods | 0.0% | 0.1% | 1.2% | 2.0% | 2.2% | 1.5% |
| Consumer Goods | -0.1% | -0.1% | -0.1% | 1.0% | 2.6% | 3.4% |
| Intermediate & Capital Goods | -0.6% | 0.0% | -1.6% | 2.5% | 3.6% | 3.0% |
| Energy | -2.0% | -1.0% | -18.9% | 9.9% | 15.8% | 4.3% |
| MFG | -1.5% | -0.5% | -9.9% | 0.1% | 3.5% | 3.9% |
| Germany | 0.0% | 0.3% | -1.2% | 7.3% | 7.8% | 1.7% |
| Germany Ex Energy | -0.3% | 0.1% | 0.0% | 2.7% | 2.9% | 2.4% |
| Italy | -1.5% | -0.5% | -7.7% | 2.0% | 5.2% | 3.7% |
| Italy Ex Energy | -0.7% | -0.1% | -2.3% | 0.8% | 3.0% | 3.2% |
| UK | -4.2% | -1.0% | -26.7% | -0.8% | 11.4% | 5.9% |
| UK Ex Energy | -0.5% | 0.3% | -0.7% | 5.6% | 7.0% | 3.8% |
