Current European CPIs Show no Sign of Rising Inflation but Consumer Expectations and High Oil Prices Pose Upside Risks

The Czech Republic, Denmark, Greece, Norway and Slovakia released Consumer price indexes for April. Since most of the data are seasonally unadjusted, year over year changes are shown in the following table for the first four months of 2004. A slight acceleration is shown in the data for Norway, while the other countries show a stable or slightly decelerating trend.

Except for Slovakia, where inflation is running at about 8%, inflation does not appear to be a problem. In both Greece and the Czech Republic, inflation is running below 3% a year and in Denmark and Norway it is virtually zero.

While the inflation evidence contained in the consumer price indexes has so far been sanguine, consumers' surveys have recently shown a decline in the balance of respondents who expect the price trend to improve over the next twelve months. Moreover, strong world growth has put pressure on commodity prices, particularly that of oil. These factors suggest upward pressure on prices.