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Economy in Brief

PPI Rises Strongly In Sept; Trend Is Still Tame
by Robert Brusca   November 04, 2010

The Euro-Area PPI spurted in September. But as the August PPI had been flat there is no acceleration in three-month growth rate after the September 0.5% spurt in the headline. None of the main PPI categories show three-month inflation acceleration either. Indeed, quite the opposite: sequential inflation rates continue to point lower for headline inflation. For the main sectors, the three-month rate of inflation resides below both the year-over-year pace.

At the country level inflation patterns are a bit less reassuring. In Germany, the Euro-Area’s strongest economy, ex-energy inflation is higher over three-months than over 12-months. In France ex energy inflation rates are steadily decelerating. In Italy and the UK inflation over three months is lower than over 12-months. But for the UK in particular the three-month pace is still high.

But of course PPI inflation is far more volatile than CPI inflation as the graph reveals. So a pace of inflation that seems uncomfortable from a CPI perceptive may not prove to be so worrisome if it is the pace at the PPI level. For the time being PPI inflation rates are slightly elevated year over but the trends within the PPI are not worrisome.

Euro-Area and UK PPI Trends
Euro-Area Sept-10 Aug-10 3Mo 6MO Yr/Yr Y/Y Yr Ago
TotalxConstruct 0.5% 0.0% 2.0% 2.6% 4.2% -7.7%
Capital Gds 0.0% 0.1% 0.4% 1.2% 0.7% -0.4%
Consumer Gds 0.1% 0.1% 1.0% 1.3% 0.8% -2.8%
Intermediate 0.7% 0.2% 3.3% 5.4% 5.0% -7.5%
MFG 0.6% 0.4% 2.3% 1.7% 3.9% -6.9%
  Gy ExEnergy 0.4% 0.4% 3.4% 4.0% 2.8% -3.3%
  Fr ExF&Energy 0.2% 0.2% 0.0% 1.3% 1.9% -3.8%
Italy 0.7% 0.3% 2.6% 1.5% 4.1% -7.5%
UK 0.5% 0.3% 3.8% 2.4% 4.5% 0.4%
Euro-Area Harmonized PPI ex construction
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