Global| Dec 02 2008Inflation Breaks Lower in the Euro Area
Summary
The Euro Area PPI dropped by 0.8% in October after dropping by 0.3% in September. This drop reduced the total ex-Construction inflation rate to 6.3% Yr/Yr. Inflation has dropped to a 4.1% pace over six months and is falling at a 5.8% [...]
The Euro Area PPI dropped by 0.8% in October after dropping by
0.3% in September. This drop reduced the total ex-Construction
inflation rate to 6.3% Yr/Yr. Inflation
has dropped to a 4.1% pace over six months and is falling at a 5.8%
pace over three months. Ex-energy
inflation at the PPI level also fell in October. Its pace has dropped
to 3.2% over 12 months 2% over six months and minus one percent over
three months. Germany ,
Italy and the UK each saw ex-energy inflation declining in October.
Three month ex-energy inflation is also well-behaved across these three
countries, falling for two of them and flat over three months in
Germany . PPI inflation
remains quite elevated over 12 months for headline as well for
ex-energy inflation in the Zone as well as in these three key
countries. But with the economy so weak the inflation overshoot is
rightly being ignored. Prospects remain for inflation to fall further.
Economies are weakening and spot oil has fallen below $48/bbl.
| Euro Area and UK PPI Trends | ||||||
|---|---|---|---|---|---|---|
| M/M | SAAR | |||||
| Euro Area 15 | Oct-08 | Sep-08 | 3-Mo | 6-MO | Yr/Yr | Y/Y Yr Ago |
| Harmonized PPI ex Construction | -0.8% | -0.3% | -5.8% | 4.1% | 6.3% | 3.3% |
| Excl Energy | -0.4% | 0.0% | -1.0% | 2.0% | 3.2% | 3.2% |
| Capital Goods | 0.0% | 0.1% | 1.2% | 2.0% | 2.2% | 1.5% |
| Consumer Goods | -0.1% | -0.1% | -0.1% | 1.0% | 2.6% | 3.4% |
| Intermediate & Capital Goods | -0.6% | 0.0% | -1.6% | 2.5% | 3.6% | 3.0% |
| Energy | -2.0% | -1.0% | -18.9% | 9.9% | 15.8% | 4.3% |
| MFG | -1.5% | -0.5% | -9.9% | 0.1% | 3.5% | 3.9% |
| Germany | 0.0% | 0.3% | -1.2% | 7.3% | 7.8% | 1.7% |
| Germany Ex Energy | -0.3% | 0.1% | 0.0% | 2.7% | 2.9% | 2.4% |
| Italy | -1.5% | -0.5% | -7.7% | 2.0% | 5.2% | 3.7% |
| Italy Ex Energy | -0.7% | -0.1% | -2.3% | 0.8% | 3.0% | 3.2% |
| UK | -4.2% | -1.0% | -26.7% | -0.8% | 11.4% | 5.9% |
| UK Ex Energy | -0.5% | 0.3% | -0.7% | 5.6% | 7.0% | 3.8% |
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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