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Economy in Brief

PPI For E-Zone Is Plunging
by Robert Brusca  February 3, 2009

Of course the ECB sets its inflation ceiling for the HICP (consumer price index) not for the PPI. Still, the sharp drop in Europe’s PPI inflation – a drop that spreads pretty much across the board (see table) - is simply another manifestation of weak inflation. Today the OECD reported that inflation in the OECD area was at a 37 year low. These sorts of results can be used to warn of the heightened risk for deflation in the OECD area as well. So far Europe and the ECB have not taken the bait. The Fed has recently shifted to a more public stance of worry about deflation risk. But Europe has been slow to adopt stimulus and the ECB countries to use rhetoric that brands inflation as now under control and is publicly no more worried than that.

Ezone and UK PPI Trends
  M/M Saar
Ezone-15 Dec-08 Nov-08 3-Mo 6-MO Yr/Yr Y/Y Yr Ago
TotalxConstruct -1.3% -2.0% -15.2% -6.8% 1.8% 4.4%
Excl Energy -0.6% -0.9% -7.4% -2.3% 1.6% 3.2%
Capital Gds 0.0% 0.1% 0.7% 1.4% 2.2% 1.5%
Consurmer Gds -0.2% -0.3% -2.2% -0.6% 1.5% 4.0%
Intermediate&Cap Gds -0.7% -1.1% -9.6% -3.1% 1.7% 2.7%
Energy -3.7% -5.2% -35.7% -19.9% 2.1% 8.6%
MFG -1.6% -2.1% -18.9% -10.8% -1.2% 4.8%
Germany -1.0% -1.5% -9.8% -1.9% 4.3% 2.5%
  Gy ExEnergy -0.6% -0.8% -6.4% -1.4% 1.5% 2.2%
Italy -1.3% -1.8% -17.1% -8.5% 0.6% 4.7%
  It ExEnergy -0.6% -1.0% -8.9% -3.9% 1.1% 3.1%
UK -1.3% -2.2% -18.9% -15.1% 5.7% 7.9%
  UK ExEnergy 0.2% -0.2% -1.7% 0.9% 6.6% 4.1%
E-zone 15 Harmonized PPI excluding Construction
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