Global| Sep 15 2010Euro-Area Inflation Ticks Up But Is Still Well-Behaved
Summary
Overall inflation ticked up to 0.4% (m/m) in August. But trends remain very much subdued in the Zone. Core inflation rose by 0.2% in August and by 0.1% in July. Broader trends signal no damage. Three month headline inflation descended [...]
Overall inflation ticked up to 0.4% (m/m) in August. But trends remain very much subdued in the Zone. Core inflation
rose by 0.2% in August and by 0.1% in July.
Broader trends signal no damage. Three month headline inflation descended to a 1.5% annual rate, lower than its six-month, or 12- month, annualized pace. The core reading has crept up to a 1.8% pace, higher than its 1.6% six-month rate and higher than its 1% 12-month rate. This measure shows steadily but only slowly creeping inflation with a peak that is still below the ECB's trigger point of 2%.
Perhaps at another time the ECB might be more worried about the creeping core inflation rate even though it professes only to place limits on the headline series.
But recently a drop in orders, output and now a drop in expectations in Germany, the Euro-Area's hot economy, may have policymakers thinking that the economy itself is cooling without any extra help for policy.
The degree of inflation in the zone seems very, very mild. Monetary indicators as well seem to be very tame. But, it is the slowing in the economy that probably is best able to shunt aside any fears of inflation and stave off any calls for monetary action.
| Trends in HICP | |||||||
|---|---|---|---|---|---|---|---|
| % Mo/Mo | % SAAR | ||||||
| Aug-10 | Jul-10 | Jun-10 | 3-Mo | 6-Mo | 12-Mo | Yr Ago | |
| EMU | 0.4% | 0.1% | -0.1% | 1.5% | 1.8% | 1.6% | -0.2% |
| Core | 0.2% | 0.1% | 0.1% | 1.8% | 1.6% | 1.0% | 1.2% |
| Goods | 0.1% | -1.2% | -0.1% | -4.6% | 2.4% | 1.7% | -1.5% |
| Services | 0.3% | 0.9% | 0.2% | 5.4% | 3.3% | 1.4% | 1.8% |
| HICP | |||||||
| Germany | 0.2% | 0.1% | -0.1% | 0.7% | 1.3% | 0.9% | 0.0% |
| France | 0.0% | 0.1% | -0.1% | 0.4% | 0.6% | 1.6% | -0.2% |
| Italy | 0.5% | -0.1% | 0.0% | 1.5% | 2.0% | 1.7% | 0.1% |
| UK | 0.3% | 0.1% | 0.1% | 1.8% | 2.3% | 3.2% | 1.5% |
| Spain | 0.4% | 0.5% | -0.1% | 3.2% | 2.4% | 1.7% | -0.7% |
| Core: xFE & A | |||||||
| Germany | 0.4% | 0.0% | 0.1% | 1.9% | 1.5% | 0.6% | 1.2% |
| France | 0.1% | 0.2% | 0.2% | 1.6% | 0.7% | 0.8% | 1.4% |
| Italy | 0.5% | -0.2% | 0.1% | 1.5% | 2.0% | 1.7% | 1.2% |
| UK | 0.3% | 0.0% | 0.3% | 2.2% | 2.6% | 2.7% | 1.9% |
| Spain | 0.2% | 0.4% | 0.4% | 3.9% | 2.1% | 0.9% | 0.5% |
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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