European Inflation: Now You See It – Now You Don't

The European bureau of statistics released Monday the latest inflation numbers for the euro zone and the European Union. The overall figures shows an annual inflation rate at 1,7% in July for the euro zone, up from 1,4% a year earlier, to the highest level in 20 months.  However, on monthly basis the euro zone inflation was negative by -0,2% in July. Annual inflation rose in nineteen EU Member States in July, remained stable in one and fell in six.

“In July 2010, the lowest annual rates were observed in Ireland  with -1.2%  and the highest in Romania with 7.1%.”

Eurostat


The euro area annual inflation was 1.7% last month, up from 1.4% in June. A year earlier the rate was -0.6%. However, the monthly inflation was -0.3% in July, the European Bureau of Statistics, Eurostat, reported on Monday. Amongst the all EU member states, the annual inflation was 2.1% in July, up from 1.9% in June. A year earlier the annual rate was 0.2%. In July, the EU’s monthly inflation was -0.2%.

And the difference in inflation amongst the EU members are bigger than ever.

A fact that makes the European Central Bank‘s job even more difficult.

Some media reports Monday that the European inflation are picking up.

Personally I can’t see any clear trend, yet.

From Minus 1,2 To Plus 7,1

In July 2010, the lowest annual rates were observed in Ireland (-1.2%), Latvia (-0.7%) and Slovakia (1.0%).

The highest annual inflation is found in Romania (7.1%), Greece (5.5%) and Hungary (3.6%).

Compared with June 2010, annual inflation rose in nineteen Member States, remained stable in one and fell in six, Eurostat reports.

The lowest 12-month averages4 up to July 2010 were registered in Ireland (-2.4%), Latvia (-1.8%) and Portugal (0.0%), and the highest in Hungary (5.1%), Romania (4.8%) and Poland (3.3%).

Some Compartments

Interesting to compare the figures above with a few forecasts.

Here’s Saxo Bank’s CPI forecast for the euro zone and UK:

This is the Central Bank of Norway’s latest national CPI forecast:

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And here’s another interesting chart, comparing the inflation with the money supply:

(Source: TheBigPicture)

Time For New Wardrobes

Prices on clothes have dropped nearly 10% over the last weeks, while prices on transport, alcohol and tobacco and housing have rose substantially.

The main components with the highest annual rates in July 2010 were transport (4.5%), alcohol & tobacco (3.3%) and housing (2.7%), while the lowest annual rates were observed for communications (-0.8%), recreation & culture (-0.3%) and household equipment (0.5%).

Concerning the detailed sub-indices, fuels for transport (+0.48 percentage points), heating oil (+0.17) and tobacco (+0.07) had the largest upward impacts on the headline rate, while telecommunications (-0.09) and cars (-0.07) had the biggest downward impacts.

The main components with the highest monthly rates were recreation & culture (1.2%), hotels & restaurants (1.1%) and transport (0.5%), while the lowest were clothing (-9.7%) and household equipment (-0.6%).

In particular, package holidays (+0.15 percentage points) and accommodation services (+0.11) had the largest upward impacts, while garments (-0.51) and footwear (-0.12) had the biggest downward impacts.

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Here’s a copy of the latest Eurostat Inflation Report.

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One response to “European Inflation: Now You See It – Now You Don't

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