Economy in Brief: January 2024

Only 38% of the countries in the table show inflation accelerating in December. Inflation is much more broadly decelerating right now. In November, the accelerating/decelerating split was even.

Inflation has been moving lower, but its breadth across these 14 countries is above 50% showing more acceleration than deceleration, over three months and six months. The 3-month diffusion rate is 61.5%, the 6-month diffusion is a very high 92.3%. Still, year-on-yar inflation is decelerating on balance just about everywhere with a diffusion score of 7.7%. Inflation over 12 months accelerates compared to 12-months before that only in Luxembourg, hardly a regional bellwether.

Moreover, despite what the diffusion data tell us, over three months prices are falling by more where they are falling compared to the speed of increases where they are rising. The seven country-level prices that showed inflation increase over three months averaged gains of 5.9% compared to the seven categories with prices declining that show the average decline of 8.8%. The medians also show this with the median gain where there are price rises at 4.7% vs. the median decline of 5% where there are declines. These statistics juxtapose breadth vs. the intensity of a directional move.

Over six months not only is the tendency to accelerate broader (92% of respondents) but where prices are rising the average gain is 12.5% compared to an average decline of 9.3% where prices are falling. And when we shift to explore the median statistic where there are prices rising, the median price rise is 2.6% compared to the median drop being 2.1% where prices are dropping.

Year-on-year 13 of 14 PPI price indexes, are both decelerating compared to a year ago and falling compared to their year-on-year pace. So, inflation trends and tendencies are becoming more mixed, over shorter horizons. But in the aggregate, inflation rates are moving into a lower trajectory.