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Economy in Brief

EMU Inflation Stays Under Wraps
by Robert Brusca February 26, 2010

The EMU HICP has finalized for January. Headline prices fell and core prices ( ex energy and unprocessed food) fell by 0.3%. Core prices continue to drive their Yr/Yr rate lower to juts under 1%. Goods prices in the Zone are up by 0.7% Yr/Yr while service prices are up 1.4%.over three months goods prices are falling.

EMU inflation among the large countries is fairly tightly clustered. German inflation is 0.7% over 12-months and marks the low while Italy at 1.3% over 12-months marks the high. The UK, a non monetary union country, but an EU member has headline inflation at 3.5% for 12-months.

Core inflation is clustered in the Union as well. Spain at 0.3% has the lowest Core rate over twelve months. Germany and France are both at 0.9%. Italy at 1.5% has the highest core rate.

Over three and six months headline inflation in the Zone is well-behaved while UK inflation continues to bulge, running up by as much as a 6.2% at an annual rate over three months.

In the Zone core inflation is universally low over three months; the large country with the lowest core inflation rate is Germany at -0.7%, over six months Italy has the high at 1.9%

Inflation in the Zone is weak and economic activity has been weakening. Weather has been severe in the US in Europe and it has hit the UK hard in a few places. It is hard to know the role of weather in blunting the forces of growth. For now central banks can take some breathing room on the inflation front. Growth however has yet to turn the corner in a strong dependable way.

Trends in HICP
  % mo/mo Saar  
  Jan-10 Dec-09 Nov-09 3-Mo 6-Mo 12-Mo Yr Ago
EMU -0.1% 0.2% 0.2% 1.4% 2.2% 1.0% 1.1%
  Core -0.3% 0.1% 0.0% -0.4% 0.4% 0.9% 1.8%
Goods -0.9% -0.1% 0.4% -2.4% 1.4% 0.7% 0.2%
Services -0.5% 0.8% -0.2% 0.3% -0.7% 1.4% 2.4%
HICP
Germany 0.1% 0.1% 0.2% 1.5% 1.7% 0.7% 0.9%
France 0.2% 0.3% 0.2% 2.5% 2.5% 1.2% 0.8%
Italy -0.3% 0.3% 0.2% 0.7% 2.0% 1.3% 1.5%
UK 0.9% 0.4% 0.3% 6.2% 4.4% 3.5% 3.0%
Spain 0.0% 0.2% 0.5% 2.7% 2.4% 1.1% 0.8%
Core:xFE&A
Germany -0.3% 0.2% -0.1% -0.7% 0.2% 0.9% 1.2%
France -0.2% 0.2% 0.0% 0.1% 0.3% 0.9% 1.6%
Italy -0.5% 0.3% 0.2% 0.0% 1.9% 1.5% 2.1%
UK #N/A 0.2% 0.2% #N/A #N/A #N/A 1.8%
Spain -0.3% 0.1% 0.1% -0.1% 0.0% 0.3% 1.9%
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