The Latest on Inflation
News and updates
This page intends to point out and illustrate the latest news on inflation in Europe.
It refers to newspapers, magazines, and specific examples.
Global tightening cycle might be over
September 2023:
policymakers in the US, UK, Japan, and Switzerland all decided to keep rates on hold. Does this imply that the global cycle of rate rises is over? The Financial Times discusses this today.
Reading:
Financial Times
What drives Euro area inflation?
August 2023:
The ECB released charts showing what contributes to the Euro area's rate of inflation. Since energy prices no longer contribute, headline inflation has fallen from above ten to about six percent.
In contrast, core inflation remains at a high level of four percent.
Reading:
ECB
Eurozone money supply shrinks
August 2023:
Eurozone money supply has shrunk for the first time since 2010 as private sector lending stalls and deposits decline. More data on this in the Money Supply section.
Reading:
Financial Times
Rising German Wages
August 2023:
German wages rose at a record annual rate of 6.6 percent in the second quarter of 2023, up from 5.6 percent in the previous quarter. This could be a sign that a wage-price spiral has took off.
Reading:
Financial Times
Service Sector Inflation
August 2023:
There are intense debates about whether or not additional monetary tightening is necessary to bring inflation down. Looking at prices in the service sector, especially in the Euro area we still observe high rates of inflation.
Falling Headline Inflation Rates
June 2023:
A rising number of countries experience dis-inflation, that is to say: rates of consumer price inflation are still positive but falling.
Reading:
Macrobond
High Food Prices
June 2023:
Consumers in many countries are upset about high food prices. Data from the OECD indicates that only Switzerland enjoys a modest increase while most nations see food prices 20-30 percent above January 2021 levels.
Reading:
OECD
Comparison EA, CH, US
June 2023:
Headline CPI rates of inflation are falling the Euro area, Switzerland, and the US. However, core inflation has plateaued at 5 percent in the Euro area and the US, as well as at 2 percent in Switzerland.
Inflation forecast to stay elevated
June 2023:
In its latest economic outlook, the OECD does not see inflation falling below 2% in either 2023 or 2024.
Reading:
OECD
Falling Headline Inflation, Rising Core Inflation
June 2023:
While headline inflation rates fall in both the Euro area and the US (partly due to the base effect), core inflation remains high (US) or is even increasing (EA).
Reading:
ECB
Falling House Prices in Europe
May 2023:
House prices are falling in several European nations. The latest data from Q4 of 2022 indicate a 6-7% fall in Denmark, Germany, and Sweden as well as a 10-12% reduction in Italy and Greece.
Reading:
OECD
Falling Producer Prices still high
May 2023:
After climbing 50% in a short period of time, producer prices in the Euro area's industry are now falling. Yet, they are still 42% above the April 2020 level.
Reading:
Eurostat
Inflation increases again in the Euro area
May 2023:
The latest data from Eurostat indicate that inflation increases slightly from 6.9 to 7.0 percent. The contributions are shifting from energy to services.
Reading:
Eurostat
Falling House Prices
March 2023:
The German statistical office released data on housing prices in Q4 2022, confirming that the decade of increases is over (see Indicators).
Reading:
DeStatis
Food Price Inflation in Germany
March 2023:
The latest inflation data from Germany indicate that within twelve months, food prices increased by 21.8 percent. This is by far the highest value since the introduction of the Euro.
Reading:
Deutsche Welle, Eurostat
Inflation Momentum
March 2023:
In a new presentation, the ECB provides a detailed account of what they call "underlying inflation". The charts indicate that while there is "a clear turnaround in energy inflation, momentum for core inflation has not declined".
Reading:
ECB
Euro Area core inflation continues to rise
March 2023:
Core inflation - which excludes food and energy prices - in the Euro area rose to 5.6 percent, up from 5.3 percent in the previous month. The latest data indicate that almost 9 in 10 goods and services face a rate of inflation in excess of the 2 percent target (see indicators).
Reading:
Financial Times
BIS Warning on Inflation
February 2023:
The Bank for International Settlements (BIS) emphasized the difficulty of bringing inflation down. Claudio Borio, head of the monetary and economic department, said it is "much easier to get inflation from 8 per cent to 4 per cent when the work is done by [falling] commodities prices, than it is to get it from 4 per cent to 2 per cent, which is the part that central banks will have to do".
Hyun Song Shin, the BIS's head of research, added that the "reason central banks have been emphazising [the importance of] going the last mile on bringing inflation down is that, if you are not fully back to target and relax too early, you will undo all the work you have done before".
Reading:
Financial Times
Food Price Inflation
February 2023:
Inflation is the Euro area is now mainly driven by food prices. Of the 8.6% inflation in January 2023, almost 3 percentage points came from food alone, followed by energy (2.2 percentage points), services (1.8), and industrial goods (1.7).
Reading:
The Economist
Inflation continues broadening
February 2023:
Inflation in both the Euro area and Switzerland is broadening in the sense that a larger share of the basket of goods & services used to calculate inflation sees substantial price increases. For the Euro area, more than 85% of goods & services face inflation above 2%, about 63% more than 5%. In Switzerland, 56% of items have increased by 2% or more within a year and 33% increased by 5% or more.
Reading: Indicators
Inflation Expectations
January 2023:
New data from the European Central Bank indicates that consumers expect inflation in the coming years to be 2.9 and 4.6 percent (mean to median range) - substantially above the ECB's target of 2.0 percent. The small drop in the latest survey is seen as a positive sign.
Reading:
ECB
Risky European Debt
December 2022:
New research published by Bruegel shows (i) the Next Generation EU plan substantially increases EU debt and (ii) EU debt is considered far more risky than that of Germany.
Reading:
Bruegel
ECB Inflation Forecast
December 2022:
According to the latest ECB forecast, inflation in the Euro area will only come down to 2% in Q3 of 2025 (see indicators). This implies that from Q1 2020 to Q1 2025, in just five years, the Euro loses a quarter of its purchasing power.
Reading:
ECB
Falling Container Freight Rates
December 2022:
Prices for international container shipping peaked in summer 2021 and have fallen sharply ever since. The composite index today is about a quarter of its peak value.
Reading:
MacroMicro
Shrinking CB Balance Sheets
December 2022:
There are first signs that central banks are reducing their balance sheets. The latest data from the Federal Reserve, the European Central Bank, the Bank of Japan, and the Swiss National Bank are all below peak.
Reading:
Financial Times
Rising Food Prices
December 2022:
Food price inflation continues to grow. The latest Eurostat data from October indicate that food in Germany got almost 20% more expensive within a year.
Reading:
Eurostat
Falling Oil Price
November 2022:
One reason why rates of inflation could possibly decrease somewhat in the near future is that energy prices have not continued to increase. The oil price, for instance, is down around a third from its peak earlier in 2022.
Other commodity prices are also easing (see Indicators), leading to reduced PPI.
Eurozone Wage Growth Accelerating
November 2022:
New data from job ads indicate increased wage growth in the Euro area. Median pay is 7 percent higher than a year ago in Germany. This could signal the beginning of a wage-price spiral.
Reading:
Financial Times
Euro Area Inflation jumps to 10.7 percent
October 2022:
The latest data from Eurostat documents another record for the rate of consumer price inflation in the Euro area. All three major economies - France (7.1), Germany (11.6), and Italy (12.8) - are far above the 2% target.
Reading:
Eurostat
Inflation 10% in Euro Area, 3.3% in Switzerland
October 2022:
The inflation developments in the Euro area and Switzerland diverge further: While the EA sees a jump to 10.0%, Switzerland observed a reduction to 3.3% in September.
The Great Tightening
September 2022:
The renowned weekly magazine The Economist discusses the "great tightening" - central banks raising interest rates. Moreover, the author points out the lack of international coordination.
Reading:
The Economist
Shrinking Central Bank Balance Sheets
September 2022:
Data compiled by Macrobond illustrates that major central banks have started to shrink their balance sheets to combat soaring inflation.
Reading:
Macrobond
Rising Inflation Expectations
September 2022:
The ECB's Consumer Expectations Survey reveals that for the next 12 months, people expect on average seven percent inflation (median: five percent).
Reading:
ECB
Drivers of Global Inflation
September 2022:
The International Monetary Fund analyzed the drivers of inflation for 88 countries. As the chart indicates food and energy are the main factors.
Reading:
IMF
Inflation Top Public Concern
August 2022:
Inflation is the number one global concern according to Ipsos. In July, 38% said it is one of the top issues facing their country today. The market research firm conducted surveys across 27 countries between June 24 and July 8, 2022.
Reading:
Ipsos
Anti-Fragmentation in Action
August 2022:
Newly released data by the ECB indicate that the central bank has used funds freed up by maturing debt to purchase Southern European debt, pushing their yields down. "Net holdings in German, French and Dutch bonds dropped by 18.9 billion euros ($19.3 billion) through July. Net purchases of debt from Italy, Spain, Portugal and Greece totaled 17.3 billion euros."
Source of image and reading:
Bloomberg
OECD Inflation above 10%
August 2022:
Consumer prices in OECD countries, a club of 38 rich countries, rose above ten percent. This is the first time since the late 1980s.
Reading:
OECD
Record-High Inflation in the Euro Area
July 2022:
The latest update from Eurostat shows 8.6% inflation in June, far above the 2% goal stated by the European Central Bank.
Reading:
Eurostat
Surging Producer Prices
June 2022:
Producer prices in Europe's largest economy continue to surge. The latest update shows an increase by 33.6% year-on-year. A new all-time record.
Reading:
DeStatis
New Public Debt Crisis?
June 20222:
As bond yields climb everywhere, Credit Suisse analyzed the risk of a new public debt crisis. The data shows how governments have exploited the record-low interest rates of recent years to extend the average maturity of their debt portfolios and lock in the benefit of low interest rates for a longer period.
Reading:
Credit Suisse
Rising Bond Yields
June 2022:
A saying in London pubs has it that there is no number between two and six. The same might hold for Italian bond yields. At 3.65 percent, they are now higher than during the short peak following ECB President Lagarde's comments in spring 2020.
Reading:
MarketWatch
Supply Chain Pressure
June 2022:
The latest update on the supply chain pressure index shows a modest decrease but is still at a very high level compared to previous years.
Reading:
Liberty Street Economics
Euro Area Inflation
June 2022:
Currently, we see four record numbers for inflation in the Euro area. The maximum, the minimum, and the average rate of CPI inflation are at a record high. On top, the difference between the lowest and highest rate was never that large.
Reading:
Cash.ch
Stronger US Dollar
May 2022:
The US Dollar has recently started to surge in value. Both the Euro and the Swiss France depreciated strongly. This will raise energy prices in Europe.
Reading:
Indicators
Wage-Price Spiral?
May 2022:
The Bank for International Settlements (BIS) examines whether major advanced economies are on the verge of a wage-price spiral.
If inflation remains high, households may ask for higher wages and firms may raise prices. And stubbornly high inflation may lead to institutional changes such as automatic indexation and cost-of-living adjustment clauses.
Reading:
BIS, May 4, 2022
Industrial Producer Prices in the Euro Area
May 2022:
Eurostat just announced that industrial producer prices in the Euro area are up 36.8% compared with a year ago.
Reading:
Eurostat, May 3, 2022
Surging Food Prices
April 2022:
The Food and Agriculture Organization of the United Nations Food Price Index surged in March to a new highest level since its inception in 1990.
Reading:
FAO, March 10, 2022
German Inflation at 7.6%
March 2022:
The Federal Statistical Office in the largest Euro economy expects 7.6% inflation for March 2022, a 40-year high for Germany.
Reading:
DeStatis, March 31, 2022
30-Year High Inflation in the UK
March 2022:
The government has set the Bank of England a target of keeping inflation at two percent. Yet, the latest reading shows 6.2%, a 30-year high.
Reading:
ONS, March 23, 2022
Global Commodity Prices rally
March 2022:
The latest data indicate that global commodity prices are on track for the biggest weekly rally in more than fifty years. Prices have doubled since April 2020.
Reading:
Financital Times, March 3, 2022
Producer Prices in Germany surge
February 2022:
Producer prices in Germany in January 2022 were 25% higher than in January 2021. This was by far the largest increase in ever recorded. The dashed line shows 2%.
Reading:
DeStatis, Feb 21, 2022
ECB discusses House Price Inflation
February 2022:
ECB executive board member Isabel Schnabel tells the FT that the house price surge 'cannot be ignored'. However, the key ECB measure for inflation does so - and will continue to do so.
Reading:
Financial Times, Feb 16, 2022
Asset Price Inflation in Germany
February 2022:
Flossbach von Storch reports asset price inflation in Germany at 9.2% in the year of 2021. There is a decline in Q4, yet inflation remains exceptionally high.
Reading:
FvS, Feb 15, 2022
House Price Inflation feeds CPI Inflation
February 2022:
New research by the San Francisco Fed provides empirical support for the idea that changes in house prices ("asset price inflation") predict CPI inflation a year later: "This prediction translates into an additional 1.1pp increase in overall CPI inflation for both 2022 and 2023."
Reading:
Fed, February 14, 2022
Record-High Producer Price Inflation in Germany
February 2022:
The German Federal Statistical Office (Destatis) reports that in December 2021, the index of producer prices for industrial products increased by 24.2% compared with December 2020, 10.4% when excluding energy.
This was the highest increase ever.
Reading:
DeStatis, Feb 10, 2022
Rising European bond yields
February 2022:
The ECB's refusing to rule out a potential rate rise this year contributed to higher borrowing costs for eurozone governments.
Reading:
Financial Times, Feb 7, 2022
US inflation at 40-year high
January 2022:
Consumer prices in the United States grew by 7.0% in 2021. This marks the highest rate of inflation since 1981.
Data from the US BLS.
Highest rate of inflation ever in the Euro area
January 2022:
According to Eurostat, with 5.0% the rate of consumer price inflation (HICP) is at an all-time high.
Reading:
Financial Times, Jan 7, 2022
Asset Price Inflation in Germany at Record High
November 2021:
Prices for assets owned by German households have risen by +12.1% compared with the same quarter a year earlier. This is the highest price increase since the start of the time series in 2005. Assets are now almost 30% more expensive than in 2017.
Source:
Flossbach von Storch
Special Bloomberg issue on inflation
November 2021:
Bloomberg Businessweek features a special report on inflation.
"The fear is real. But maybe the monster is not."