Recent Updates

  • Korea: First 20 Days of Trade (Oct)
  • Japan: Senior Loan Officer Opinion Survey (Q3)
  • Thailand: State Enterprise Budget Plan Summary (Aug)
  • China: 70-City Property Prices, CPI by Region (Sep), Capacity Utilization, GDP (Q3)
  • US: Regional Retail Sales (Sep)
  • Spain: Motor Vehicle Registrations (Sep)
  • more updates...

Economy in Brief

EMU Rate Is Tepid On The Month But Headline Rate Continues Trend Acceleration
by Robert Brusca June 16, 2010

The inflation picture looks worse than the inflation reality. The chart above shows headline inflation seemingly 'soaring' off to the races running at a 1.6% Yr/Yr pace. Notice the scale and the push is a bit less daunting. For 3-mo headline inflation the pace is at 2% which is the ECB's speed limit. But in reality inflation's upsurge has all been due to a push from oil prices that has sent goods prices soaring at 9% annual rate over three-months. Oil has since stabilized. Service sector inflation is hovering between 1% and 1.5%.

Moreover, core inflation in the zone is steady and low. The core rate is at 0.9% Yr/Yr and has accelerated to 1.4% over three months as energy prices have spurted. But there is no steady acceleration involved nor does the Euro-economy look like it is overheating- far from it.

The euro-area however is still growing. There is not serious sign of an economic set-back. Yet forward-looking confidence indicators have begun to crumble as UK consumer confidence fell by 10 points, and the Zew readings for Germany and Switzerland each have taken a giant step backward on the weakness in their expectations components. Still the Zew current reading for Germany continued to advance as expectations were slashed back sharply.

On balance it is not a situation that seems very hospitable to inflation. Current trends do not look that daunting; the environment is not inflation friendly. The sole inflation rating force in the Zone is the ongoing weakness in the euro itself and for that to become an issue the zone will have to get much stronger.

Trends in HICP
  % mo/mo % saar  
  May-10 Apr-10 Mar-10 3Mo 6Mo 12Mo Yr Ago
EMU 0.0% 0.1% 0.4% 2.0% 1.6% 1.6% 0.0%
Core 0.2% 0.0% 0.2% 1.4% 0.8% 0.9% 1.5%
Goods 0.1% 0.8% 1.4% 9.9% 3.3% 1.9% -1.4%
Services 0.1% 0.0% 0.2% 1.1% 2.0% 1.3% 2.1%
HICP
Germany 0.1% -0.2% 0.6% 1.9% 1.1% 1.2% 0.0%
France -0.1% 0.1% 0.2% 0.7% 2.1% 1.9% -0.3%
Italy -0.1% 0.5% 0.3% 2.6% 1.7% 1.6% 0.8%
UK -0.2% 0.5% 0.4% 2.9% 4.0% 3.4% 2.2%
Spain 0.1% 0.0% 0.3% 1.7% 1.0% 1.8% -0.9%
Core:xFE&A
Germany 0.4% -0.5% 0.4% 1.1% 0.4% 0.6% 1.2%
France 0.1% -0.1% 0.0% -0.1% 0.9% 0.8% 1.5%
Italy -0.1% 0.5% 0.3% 2.6% 1.3% 1.5% 1.9%
UK 0.1% 0.3% 0.4% 2.9% 3.1% 2.8% 2.1%
Spain 0.2% -0.2% 0.1% 0.4% -0.4% 0.3% 0.9%
close
large image