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.
Shrinking Central Bank Balance Sheets
Data compiled by Macrobond illustrates that major central banks have started to shrink their balance sheets to combat soaring inflation.
Rising Inflation Expectations
The ECB's Consumer Expectations Survey reveals that for the next 12 months, people expect on average seven percent inflation (median: five percent).
Drivers of Global Inflation
The International Monetary Fund analyzed the drivers of inflation for 88 countries. As the chart indicates food and energy are the main factors.
Inflation Top Public Concern
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.
Anti-Fragmentation in Action
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:
OECD Inflation above 10%
Consumer prices in OECD countries, a club of 38 rich countries, rose above ten percent. This is the first time since the late 1980s.
Record-High Inflation in the Euro Area
The latest update from Eurostat shows 8.6% inflation in June, far above the 2% goal stated by the European Central Bank.
Surging Producer Prices
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.
New Public Debt Crisis?
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.
Rising Bond Yields
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.
Supply Chain Pressure
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.
Liberty Street Economics
Euro Area Inflation
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.
Stronger US Dollar
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.
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.
BIS, May 4, 2022
Industrial Producer Prices in the Euro Area
Eurostat just announced that industrial producer prices in the Euro area are up 36.8% compared with a year ago.
Eurostat, May 3, 2022
Surging Food Prices
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.
FAO, March 10, 2022
German Inflation at 7.6%
The Federal Statistical Office in the largest Euro economy expects 7.6% inflation for March 2022, a 40-year high for Germany.
DeStatis, March 31, 2022
30-Year High Inflation in the UK
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.
ONS, March 23, 2022
Global Commodity Prices rally
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.
Financital Times, March 3, 2022
Producer Prices in Germany surge
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%.
DeStatis, Feb 21, 2022
ECB discusses House Price Inflation
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.
Financial Times, Feb 16, 2022
Asset Price Inflation in Germany
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.
FvS, Feb 15, 2022
House Price Inflation feeds CPI Inflation
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."
Fed, February 14, 2022
Record-High Producer Price Inflation in Germany
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.
DeStatis, Feb 10, 2022
Rising European bond yields
The ECB's refusing to rule out a potential rate rise this year contributed to higher borrowing costs for eurozone governments.
Financial Times, Feb 7, 2022
US inflation at 40-year high
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
According to Eurostat, with 5.0% the rate of consumer price inflation (HICP) is at an all-time high.
Financial Times, Jan 7, 2022
Asset Price Inflation in Germany at Record High
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.
Flossbach von Storch
Special Bloomberg issue on inflation
Bloomberg Businessweek features a special report on inflation.
"The fear is real. But maybe the monster is not."