Global| Mar 02 2011PPI Prices Climb Sharply in EMU
Summary
The PPI in the Euro Area is up to 6.1% Yr/Yr and still accelerating. Over 6-mos the pace is 8.5%and over 3-Mo the paces is 12.3%. Most of the damage is being done in the intermediate goods sectors where commodity prices, especially [...]
The PPI in the Euro Area is up to 6.1% Yr/Yr and still accelerating. Over 6-mos the pace is 8.5%and over 3-Mo the paces is 12.3%.
Most of the damage is being done in the intermediate goods sectors where commodity prices, especially oil have the largest impact.
Still core price inflation is accelerating across the Zone and in Europe, in Germany, and in France also in the UK, an EU member country.
There are also minor increases in inflation for capital goods and consumer goods. For consumer goods inflation has edged up from 2% Yr/Yr to 3% over 6-mos and to 3.5% over 3-mos. For capital goods the move up is less steady but the 12-month pace of inflation in that sector is 0.9% compared to 1.1% over three months.
On balance this is the producer prices index and not the more important CPI (HICP). Still the acceleration in intermediate goods prices will give the ECB pause. While producer prices do not map neatly into consumer prices when the pressure gets to be this intense the central bank will take notice. The ECB has been flashing hot and cold over the need to fight inflation. Its last take seemed to be that the need to hike rates was not so great. But now with the Middle East conflict broken out and oil prices making another push that stance could be set to change. The pressures at the producer price level are intense and they may be spreading beyond intermediate goods alone.
| Euro Area and UK PPI Trends | ||||||
|---|---|---|---|---|---|---|
| M/M | SAAR | |||||
| Euro Area | Jan-11 | Dec-10 | 3-Mo | 6-MO | Yr/Yr | Y/Y Yr Ago |
| TotalxConstruct | 1.3% | 1.1% | 12.3% | 8.5% | 6.1% | -1.0% |
| Capital Gds | 0.2% | -0.1% | 1.1% | 0.7% | 0.9% | -0.6% |
| Consurmer Gds | 0.2% | 0.4% | 3.5% | 3.0% | 2.0% | -0.7% |
| Intermediate | 1.4% | 1.0% | 13.8% | 9.6% | 7.4% | -1.5% |
| MFG | 1.0% | 1.2% | 13.4% | 9.4% | 5.6% | 0.9% |
| Germany | ||||||
| Gy ExEnergy | 0.7% | 0.5% | 6.5% | 4.6% | 4.1% | -1.1% |
| France:Tot | ||||||
| Fr ExF&Energy | 0.8% | 0.1% | 6.5% | 4.0% | 3.0% | -0.9% |
| UK | 1.0% | 0.5% | 8.3% | 6.7% | 4.8% | 3.5% |
| Euro Area Harmonized PPI ex construction | ||||||
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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