Global| Apr 03 2007Euro Area and UK PPI Trends
| · The Euro area 13 PPI rose by 0.3% in February. Excluding energy the rise was 0.3% as well. Trends show that PPI inflation pressures are elevated. And while the PPI is not the main focus of ECB policy, the pressure on prices is widespread across main EU countries. The bank of England has even recently said it was going to look beyond headline inflation as legacy issues might damp that calculation in the coming months. Central banks are becoming more concerned about embedded inflation pressures. |
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| M/M | SAAR | ||||
| Euro area 13 | Feb-07 | Jan-07 | 3-Mo | 6-MO | Yr/Yr |
| Total (Excl Construction) | 0.3% | 0.2% | 2.1% | 0.2% | 2.9% |
| Excl Energy | 0.3% | 0.5% | 3.4% | 2.7% | 3.4% |
| Capital Goods | 0.1% | 0.5% | 2.9% | 2.3% | 2.0% |
| Consumer Goods | 0.2% | 0.3% | 2.4% | 1.2% | 1.6% |
| Intermediate & Capital Goods | 0.3% | 0.6% | 3.9% | 3.4% | 4.4% |
| Energy | 0.4% | -0.7% | -1.8% | -7.5% | 1.0% |
| Manufacturing | 0.4% | 0.1% | 2.3% | -0.4% | 2.5% |
| Germany | 0.3% | 0.0% | 1.0% | 0.3% | 2.8% |
| Excl Energy | 0.3% | 0.2% | 2.2% | 2.4% | 3.0% |
| France | 0.3% | 0.1% | 1.1% | -0.7% | 2.0% |
| Excl Energy | 0.2% | 0.5% | 2.2% | 1.9% | 2.8% |
| Italy | 0.4% | 0.0% | 2.4% | 0.2% | 4.0% |
| Excl Energy | 0.3% | 0.6% | 4.3% | 3.0% | 4.2% |
| UK | -0.8% | -1.4% | -6.7% | 1.4% | -1.4% |
| Excl Energy | 0.4% | 0.5% | 3.7% | 3.1% | 3.4% |
| Euro area 13 Harmonized PPI excl Construction. | |||||
| The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain | |||||
| 6COLSPAN | |||||
Trend across categories and countries do not show a steadily accelerating inflation rate that central banks would clearly abhor. But they do show that pressures that had dissipated have re-emerged in the 3-month inflation rates. Excluding energy, inflation trends across the main countries show the same tendency except in Germany and in France where the pace of PPI ex-energy inflation is staying fairly constant, just above the 2% pace.
The headline inflation rate is moving steadily lower, but ex-energy inflation is considerably more stubborn around 3.5%, well above the ECB ceiling rate of 2% (for the HICP).
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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