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  • 1 min

Core Inflation rate is lower now in the Eurozone – Worrisome

  • 10 June 2014
  • Philippe Waechter
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Usually the low inflation rate in the Euro Area is explained by low and downward trending commodity prices. It’s easy to think that the risk of deflation comes from outside.
This is no longer the case. In May commodity prices’ contribution to the inflation rate was null.
We can go further and notice that the situation is worse now than two months ago.At the end of the first quarter, the core inflation rate (March compared to December) was at the same level in 2011, 2012, 2013 and 2014. At the same time, the headline inflation rate was decreasing from 2011 to 2014.
As the chart below shows, the situation has changed when we look at the first five months of the year (May compared to December). The headline inflation rate is still following a downward trend (left part of the chart) but now the core inflation rate is the lowest of the last 4 years (right part)
The lower inflation rate in the Euro Area has also internal sources reflecting imbalances. It’s no longer explainable by commodity prices only. That’s why the ECB had to be more aggressive in its action last Thursday.
EA-2014-may-Inf-sur-5-months.

On the same topic
  • 2 min

The Federal Reserve takes over

  • 27 January 2022
  • Monetary Policy

Philippe Waechter

At its January 25-26 meeting, the US central bank confirmed that it would raise interest rates as of its mid-March meeting. Above all, it indicated that very soon after it…
  • Federal Reserve
  • Inflation
  • Interest Rates
READ
  • 3 min

Inflation continues, the Fed could weigh on growth

  • 13 January 2022
  • Monetary Policy

Philippe Waechter

US inflation is mainly conditioned by the pace of the price of goods and that of oil. The rush of households on goods, while inventories were reduced, is the source…
  • Energy price
  • Inflation
READ
  • 1 min

Reflections on pensions in France

  • 13 January 2020
  • France

Philippe Waechter

Discussions in France about retirement often give the impression that pensions have to correct a large part of the inequalities of the working period.They suggest an at least partial dissociation…
  • Labor Market
  • Retirement
READ
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