Global| Jul 31 2009EMU Inflation Rate Moves Lower
Summary
Inflation remains under control in the EMU region in July. Despite ECB concerns about inflation and German and other concerns about the degree of stimulus money supply growth remains very tepid in the EMU region and inflation [...]
Inflation remains under control in the EMU region in July.
Despite ECB concerns about inflation and German and other concerns
about the degree of stimulus money supply growth remains very tepid in
the EMU region and inflation continues to drop. In July the FLASH HICP
(a figure for which there are no details available) fell by 0.2%.
Overall inflation on this measure is a negative 0.6% over 12-months and
is running at a pace of zero over three months.
HICP inflation has fallen in two of the last three months in
Germany. German inflation is down by 0.7% over 12-months. Inflation
even fell in Italy in July and prices in Italy are falling over
12-months as well.
On balance the news from Europe is quite good on the inflation
front. Japan also reported out a decline in CPI prices. For Japan it
was June inflation falling by 1.7% Yr/Yr.
Growth: both sides of the pond
The US GDP report reverberated with signs that the slowdown is abating
as US exports cut the rate of descent and most US GDP components cut
their rate of descent as well. US GDP dropped at just a 1% annual rate,
making positive growth in Q3 a real possibility. The fact that nearly
all GDP components in the US cut their pace of decline is a good sign.
The fact that inflation remains under control throughout the global
economy is another good sign. The data from the EU Commission yesterday
reminded us that although ‘things’ are improving the diffusion readings
on growth by sector show that that contraction is overwhelmingly the
name of the game across Europe. The US alone looks poised to break the
growth barrier any minute.
Growth, inflation and central banks
Today is a day when we are getting some of the news we have been
waiting on for a long time. It is still not clear how much of an
inflation threat we have when the US economy turns around. For now the
growth turnaround appears to be nearly at hand. Inflation appears to
still be well under wraps. It seems that the world’s central banks are
in a good a position to look at what they have done and to make the
needed adjustments without creating one sort of chaos or another. But
you never can tell until they have done something. The one fly in the
ointment is the still large external imbalances and the behavior of
exchange rates. Everyone seems to want a weak currency and
mathematically it just is not possible. This will be the market to keep
close watch on as things begin to improve.
| Trends in EMU HICP; Flash Index | |||||||
|---|---|---|---|---|---|---|---|
| % mo/mo | % saar | ||||||
| Jul-09 | Jun-09 | May-09 | 3-Mo | 6-Mo | 12-Mo | Yr Ago | |
| EMU-13 | -0.2% | 0.3% | 0.0% | 0.0% | 0.3% | -0.6% | 4.0% |
| Core | #N/A | 0.1% | 0.0% | 1.0% | 0.9% | 1.3% | 2.5% |
| Goods | #N/A | 0.3% | 0.1% | 2.8% | 1.1% | -1.5% | 5.0% |
| Services | #N/A | 0.1% | 0.1% | 2.2% | 1.2% | 1.9% | 2.5% |
| HICP | |||||||
| Germany | -0.4% | 0.5% | -0.2% | -0.4% | 0.0% | -0.7% | 3.5% |
| France | #N/A | 0.2% | 0.0% | 0.3% | 0.3% | -0.6% | 4.0% |
| Italy | -0.6% | 0.3% | 0.0% | -1.1% | 0.7% | -0.1% | 4.1% |
| Spain | #N/A | 0.4% | -0.1% | 1.0% | -0.5% | -1.0% | 5.0% |
| Core excl FE&A | |||||||
| Germany | #N/A | 0.2% | -0.1% | 1.5% | 1.3% | 1.2% | 1.7% |
| Italy | #N/A | 0.1% | 0.1% | 1.1% | 0.9% | 1.6% | 3.0% |
| Spain | #N/A | 0.2% | 0.0% | 0.8% | -0.3% | 0.8% | 3.4% |
| Blue shaded area data trail by one month | |||||||
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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