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Economy in Brief

German PPI Continues to Move Up...Should we be worried?
by Robert Brusca   October 20, 2010

Germany's PPI continues to advance and its sequential growth rates all show up trends. The 'silver lining' in this group of clouds is that the three-month growth has settled down below the 6-month growth rate indicating that some of the upward momentum has dissipated.

A recent request by the Bundesbank's Axel Weber to stop the extraordinary securities purchases was rebuffed by Trichet who said that Weber was isolated in this stand. In the ECB the breadth of concern continues to be on the economy and not focused on the rising inflation trend. Germany already has influenced global macro policy by winning the argument of stimulus Vs austerity at this year's summit. With many economies still very weak and Germany strong on the back of export led growth despite its policy shit to austerity, the Germans find themselves out of sync with rest of the Community's needs.

Still the ECB is a single mandate central bank. Inflation could yet come to dominate its concerns...

With the rising euro, however, the time when a price level seems like threat to real stability may be farther off than the Germans fear. While not an EMU member the UK put a finer point on its budget-cutting plans today. It also reported out some very weak money growth statistics. China has stated some braking action of its economy and its welter of problems. While it is easy to wonder if inflation will be problem down the road we are still in the midst of a different batch of issues. The trick is to solve the near-term growth problem without igniting inflation in the future. It is that more than creeping inflation pressures that is the policymakers' and central bankers' biggest challenge.

Germany PPI
  % M/M % SAAR
  Sep-10 Aug-10 Jul-10 3-Mo 6-Mo 12-Mo 12-MoY-Ago IN Q3
PPIxConst 0.5% 0.1% 0.4% 3.7% 4.5% 3.8% -3.9% 3.7%
 Ex Energy 0.4% 0.4% 0.1% 3.4% 4.0% 2.8% -3.3% 3.1%
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