Inflation is back. The first stage has been the rise in oil prices from $30 to $50 per barrel, which is already being passed on to the consumer economies. Too much inflation is a bad thing: it creates rising expectations and people try to anticipate them. But too little is even worse. The 2008 crisis caused a very costly deflation. .
Julius Baer | Eurozone inflation is approaching its highest level since late 2013 with a December reading on Wednesday at 1.1%. A glance at the core inflation rate, which excludes the volatile food and energy component, delivers the explanation of the recent surge
The markets are still discounting the inflationary impact of Trump’s measures. Furthermore, they are anticipating the positive effects of his fiscal policy, the best short-term guarantee of which is in economic agents’ shift in expectations. Our criticism of excessive complacency on these issues is well-known, although it’s true that the market doesn’t see it that way.
BoAML | Euro area GDP grew 0.3% qoq in 3Q, in line with consensus expectations and our tracker. Meanwhile, inflation was again weaker than the release would suggest, if we look at the finer details.
J.L. M. Campuzano (Spanish Banking Association) | It’s still early days yet to affirm that the uptick in medium and long-term interest rates really reflects a change in trend. But it’s true that the central banks in the main developed countries are sending ever more clear signals about the limits of continuing to increase expansionary monetary policy.
Spanish think tank Funcas said this week it forecasts an average annual inflation rate in Spain of 1.5% in 2017, although it is feasible that this could reach 2% in one month or other during the first half of next year due to factors like the uptick in oil prices.
The inflation rate for the Euro Area (flash estimate) was at +0.4% in September. It is the highest since October 2014. In August the inflation rate was at 0.2%. The core inflation rate was stable at 0.8%. The explanation has to be found in the oil price profile as said by Philippe Waechter, Chief Economist at Natixis AM.
Spain’s Consumer Price Index (CPI) grew four tenths of a pecent to 0.3% in September from a year earlier, returning to positive territory for the first time this year. The last time inflation moved out of negative territory was in December 2015, when the rate was 0%.
Philippe Waechter, chief economist at Natixis AM explains the current structure of US prices showing that housing market contributes to more than 60% of the inflation rate.
Spain’s socialist party PSOE doesn’t seem to be too worried about the fact the country may not have a 2017 Budget. But it’s increasingly clear to all of us that the lack of a budget will not be without a cost. On the contrary, it will greatly affect a large part of Spanish society. Almost all economists believe that the impossibility of drawing up new accounts, and updating certain items, could mean that the amount spent on civil servants’ salaries will be maintained.