Global| Apr 06 2009Euro Area Inflation Is Still Dropping Fast
Summary
EMU inflation drops at record pace in February. EMU inflation dropped in February after a very sharp drop in January. Over three-months the annual pace of decline is at -12% compared to -11% over six-months. This is a strong pace to [...]
EMU inflation drops at record pace in February. EMU
inflation dropped in February after a very sharp drop in January. Over
three-months the annual pace of decline is at -12% compared to -11%
over six-months. This is a strong pace to stay in force over these two
periods. Over 12-months, inflation is off by 1.8% compared to being up
by 5.3% Yr/Yr one year ago. Thus average inflation over the past two
years is quite tame, under two percent.
A job well done…but. Central banks can be
content that despite all the angst, they handled the energy price spurt
well and did manage to keep inflation at bay. Still, inflation is well
under control and last week ahead of the G-20 meeting, the ECB gave the
markets a smaller rate cut than they had anticipated. Now with the
inflation numbers still showing declines the ECB is expected to be
cutting rates again.
Widespread drops, too. Inflation is falling
in Germany and in Italy at about the same pace as in EMU over the last
3 and 6 months. The UK has inflation falling fast over six months but
the pace of decline has let up over the past three-months.
| Euro Area and UK PPI Trends | ||||||
|---|---|---|---|---|---|---|
| M/M | Saar | |||||
| Euro Area | Feb-09 | Jan-09 | 3-Mo | 6-MO | Yr/Yr | Y/Y Yr Ago |
| Total ex Construction | -0.6% | -1.5% | -12.0% | -11.2% | -1.8% | 5.3% |
| Capital Goods | 0.0% | -0.2% | -0.6% | 0.6% | 1.7% | 1.6% |
| Consumer Goods | -0.2% | -0.8% | -5.0% | -3.6% | -0.5% | 4.7% |
| Intermediate & Capital Goods | -1.1% | -1.9% | -15.4% | -11.9% | -3.1% | 4.2% |
| MFG | -0.5% | -1.0% | -11.7% | -12.9% | -3.9% | 5.5% |
| Germany | -0.7% | -1.4% | -12.5% | -5.9% | 2.1% | 2.7% |
| Gy Ex Energy | -0.6% | -0.6% | -6.6% | -5.1% | -0.7% | 2.2% |
| Italy | -0.8% | -0.9% | -12.0% | -13.1% | -3.3% | 6.3% |
| UK | 0.4% | 0.7% | -5.2% | -14.7% | 2.1% | 13.1% |
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.
More Economy in Brief
