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Economy in Brief

All Producer Prices in EMU Still Under Downward Pressure
by Robert Brusca August 4, 2009

EMU producer prices (x-construction) ticked up in June but are still falling at an accelerating pace Year-over-year. Sector prices are weak and falling across the board on all horizons but the rate of descent is not gathering momentum overall or by sector. In the end that is the really good news.

Germany shows prices falling over three-months at about the same pace they are falling over six months, both of which are at a faster pace of decline than year-over-year. But core German prices, Italian prices and UK prices, in particular, are not showing any continuing deceleration: declines yes, but decelerations, no. In the UK PPI prices have started to rise. In Italy the down turn has abated and there is one month in which the PPI headline rate has risen (June). German trends are marked by still declining headline and core rates even monthly, but the move down is not accelerating.

In short inflation appears to be contained and deflation does not seem to be in the cards on a sampling of big picture EMU sector news and smattering of country-level reports. Lingering economic weakness is probably having this extended impact in depressing prices.

Euro Area and UK PPI Trends
  M/M Saar
Euro Area Jun-09 May-09 3-Mo 6-MO Yr/Yr Y/Y Yr Ago
Total excl Constructions 0.2% -0.2% -4.5% -7.8% -6.7% 7.9%
Capital Goods 0.0% -0.3% -1.2% -1.2% 0.3% 2.3%
Consumer Goods -0.1% 0.0% -0.7% -3.6% -2.3% 4.8%
Intermediate & Capital Goods 0.0% -0.4% -5.2% -9.4% -6.4% 4.3%
MFG 0.5% -0.1% -0.4% -5.0% -7.4% 7.2%
Germany -0.1% 0.0% -9.4% -9.8% -3.3% 5.1%
Germany excl Energy -0.1% -0.2% -2.3% -4.1% -2.8% 2.7%
Italy 0.2% -0.2% -2.9% -6.6% -7.2% 8.1%
UK 1.1% 0.5% 1.5% 2.1% -8.6% 24.1%
E-zone Harmonized PPI ex construction
The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia
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