Global| May 14 2004Upturn in Spain's CPI Led by Energy, as Euro Falls
Summary
CPI inflation in Spain picked up last month to a 2.7% year/year increase from just 2.1% in February. While 2.7% is not a "high" inflation rate for Spain, the steep upturn from February's pace is an unusual one-month move. As evident [...]
CPI inflation in Spain picked up last month to a 2.7% year/year increase from just 2.1% in February. While 2.7% is not a "high" inflation rate for Spain, the steep upturn from February's pace is an unusual one-month move. As evident in the table below, half of it resulted from an abrupt turn in energy costs. Excluding energy, the increase in inflation was just 0.3%, and at 2.8%, this major subset of prices is rising more slowly than anytime since the middle of 2000, almost four years.
Energy prices have played an interesting role in Spanish inflation behavior in the last couple of years.
As we described here exactly a month ago for other European countries, the strong Euro since early 2002 has offset rapidly rising dollar prices of energy when they are expressed in Euro terms. Seen in accompanying graph and table, for Spain, this meant that energy prices were flat across 2003, while they rose 6.9% in the US. The "energy products" sector of Spain's CPI actually declined year-on-year in several recent months, particularly this past January through March.
However, the euro has recently been declining, and by April, the monthly average was already down about 5% from a February peak. So now, with the higher dollar and lower euro, energy products are starting to get more expensive in Europe and Spain's experience is likely being repeated elsewhere on the Continent.
| NSA, Yr/Yr % Changes | Apr 2004 | Mar 2004 | Feb 2004 | December/December|||
|---|---|---|---|---|---|---|
| 2003 | 2002 | 2001 | ||||
| Spain: Total CPI | 2.7 | 2.1 | 2.2 | 2.6 | 4.5 | 2.7 |
| CPI ex Energy Products | 2.8 | 2.5 | 2.7 | 2.9 | 4.3 | 4.0 |
| Energy Products | 1.5 | -2.5 | -2.6 | 0.0 | 6.3 | -10.0 |
| US: CPI: Energy | 5.6 | 0.4 | 3.8 | 6.9 | 10.7 | -13.0 |
| Euro/US $: Level | 1.1989 | 1.2261 | 1.2640 | 1.2298* | 1.0194* | 0.8912* |
| Yr/Yr % Change | 10.4 | 13.6 | 17.2 | 20.6 | 14.4 | -0.8 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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