Global| Feb 02 2012PPI Trends in EMU
Summary
Producer prices are moderate in December rising by 0.1% for the total index excluding construction. The headline pace has steadily lost some momentum from 4.3% Yr/Yr to 3% annualized over three months. By sector capital goods and [...]
Producer prices are moderate in December rising by 0.1% for the total index excluding construction.
The headline pace has steadily lost some momentum from 4.3% Yr/Yr to 3% annualized over three months.
By sector capital goods and intermediate goods are showing a more pronounced downtrend. Producer prices for consumer goods are a little more stubborn, stuck around the 3% mark and that is of course above the 2% ceiling for the HICP that the ECB stands behind.
At the country level Germany and France show clear downward trends for Core Producer price inflation. Year-over-year each of those measures show core inflation just over 2% and three months annualized inflation is below a 0.5% annualized rate for each of them.
Italy shows aggregate producer inflation stubborn just below a 4% pace. The UK, not an EMU member, show clear downward pressure in its producer price picture as the 12-month rate is a strong 4.7% falling to a 2.8% pace over six-months and to 1.3% over three-months.
While the ECB is much more interested in HICP trends the PPI does show us how inflation is percolating at other stages of production. Producer prices are costs on the way to consumer prices or to capital equipment depending on the product. The report for December shows that there is progress being made on the inflation front and not surprising Germany and France are at the forefront of progress and Italy is not.
Some things in the grand scheme of the Euro-Area just never seem to change regardless of the stakes. Is that statement about ready to change?
| Euro-Area and UK PPI Trends | ||||||
|---|---|---|---|---|---|---|
| M/M | SAAR | |||||
| Euro-Area | Dec-11 | Nov-11 | 3-Mo | 6-MO | Yr/Yr | Y/Y Yr Ago |
| TotalxConstruct | 0.1% | 0.4% | 3.0% | 3.2% | 4.3% | 5.4% |
| Capital Gds | 0.0% | 0.1% | 0.3% | 0.8% | 1.5% | 0.7% |
| Consumer Gds | 0.0% | 0.4% | 2.7% | 2.1% | 3.1% | 1.8% |
| Intermediate | 0.3% | 0.2% | 1.2% | -0.2% | 2.8% | 6.3% |
| MFG | 0.2% | 0.6% | 4.5% | 3.7% | 3.7% | 5.2% |
| Germany | ||||||
| Gy ExEnergy | 0.0% | 0.4% | 0.4% | 0.5% | 2.1% | 3.6% |
| France:Tot | ||||||
| Fr ExF&Energy | 0.1% | 0.1% | 0.0% | 0.2% | 2.3% | 2.6% |
| Total MFG Prices | ||||||
| Italy | 0.3% | 0.5% | 3.8% | 3.7% | 3.8% | 4.8% |
| UK | -0.2% | 0.2% | 1.3% | 2.8% | 4.7% | 4.2% |
| 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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