Germany, UK, Japan Verging On Deflation
FXStreet (Germany):
Consumer Price Index (MoM) (Mar)
Actual: -0.1% Cons.: 0.1% Previous: 0.6%
...Economists say that the chances of a protracted period of deflation in the euro zone have been rising of late, as the economic slump is set to spur a surge in unemployment.
This could weigh on demand and make it harder for firms to raise prices.
The European Central Bank said it is expecting the results of the CPI survey in the 16 countries sharing the euro to come in at below 0% for some months this year, reversing last year's oil-induced spike to rates of around 4%.
The ECB said it likes to look at this as a period of disinflation, rather than deflation, as it doesn't expect the negative trend to become entrenched in price developments for a longer period.
However, the ECB's own staff forecasts predict that inflation is likely to come in this year and next well below the institution's CPI comfort zone of just below 2%.
"The risks of a deflationary phase are intensifying," Fabio Panetta, head of research for economic and monetary policy at the Italian central bank said earlier this week.
Times Online:
Japan set for three-year return to deflation
Japan is heading back into deflation and analysts are warning that the world’s second largest economy could stay there for the next three years.
The Government said today that retail price inflation in February ground to a complete standstill, while retail sales collapsed at the fastest pace in seven years, falling 5.8 per cent, above the 3 per cent decline predicted by the market.
Japan, with its big exporting sector and high exposure to global consumerism, has been fiercely affected by the downturn. GDP has begun to fall at a pace which defied forecasts and earlier this week it was revealed that exports in February nearly halved as the world stopped buying Japanese.
Production and workforces have been slashed and salaries frozen, moves that have caused consumer confidence to cave-in at unprecedented pace as households cut back on spending and prepare for lean years ahead...
Retail Week (UK):
Spectre of deflation looms as Retail Price Index falls to zero
The stores sector faces deflation after the Retail Price Index (RPI)
fell to zero last month for the first time in nearly half a century.
Times Online:
It’s official, despite a couple of false dawns, the retail sales trend is down
High street sales plummeted last month as snow and the mounting economic gloom deterred consumers from hitting the shops.
Retail sales fell 1.9 per cent during the month, nearly five times the 0.4 per cent drop that analysts had expected. This pushed the annual rate of growth in sales to just 0.4 per cent, the lowest since 1995, figures from the Office for National Statistics (ONS) showed.
However, the figures bring the official data into line with high street surveys, which have indicated that consumers are reining in their spending sharply.
Vicky Redwood, UK economist with Capital Economics, said: “February’s sharp drop in the official measure of retail sales ends the recent puzzlingly strong run of figures and supports the message from the more timely surveys that spending growth is back on a downward trend.”
Consumer Price Index (MoM) (Mar)
Actual: -0.1% Cons.: 0.1% Previous: 0.6%
...Economists say that the chances of a protracted period of deflation in the euro zone have been rising of late, as the economic slump is set to spur a surge in unemployment.
This could weigh on demand and make it harder for firms to raise prices.
The European Central Bank said it is expecting the results of the CPI survey in the 16 countries sharing the euro to come in at below 0% for some months this year, reversing last year's oil-induced spike to rates of around 4%.
The ECB said it likes to look at this as a period of disinflation, rather than deflation, as it doesn't expect the negative trend to become entrenched in price developments for a longer period.
However, the ECB's own staff forecasts predict that inflation is likely to come in this year and next well below the institution's CPI comfort zone of just below 2%.
"The risks of a deflationary phase are intensifying," Fabio Panetta, head of research for economic and monetary policy at the Italian central bank said earlier this week.
Times Online:
Japan set for three-year return to deflation
Japan is heading back into deflation and analysts are warning that the world’s second largest economy could stay there for the next three years.
The Government said today that retail price inflation in February ground to a complete standstill, while retail sales collapsed at the fastest pace in seven years, falling 5.8 per cent, above the 3 per cent decline predicted by the market.
Japan, with its big exporting sector and high exposure to global consumerism, has been fiercely affected by the downturn. GDP has begun to fall at a pace which defied forecasts and earlier this week it was revealed that exports in February nearly halved as the world stopped buying Japanese.
Production and workforces have been slashed and salaries frozen, moves that have caused consumer confidence to cave-in at unprecedented pace as households cut back on spending and prepare for lean years ahead...
Retail Week (UK):
Spectre of deflation looms as Retail Price Index falls to zero
The stores sector faces deflation after the Retail Price Index (RPI)
fell to zero last month for the first time in nearly half a century.
Times Online:
It’s official, despite a couple of false dawns, the retail sales trend is down
High street sales plummeted last month as snow and the mounting economic gloom deterred consumers from hitting the shops.
Retail sales fell 1.9 per cent during the month, nearly five times the 0.4 per cent drop that analysts had expected. This pushed the annual rate of growth in sales to just 0.4 per cent, the lowest since 1995, figures from the Office for National Statistics (ONS) showed.
However, the figures bring the official data into line with high street surveys, which have indicated that consumers are reining in their spending sharply.
Vicky Redwood, UK economist with Capital Economics, said: “February’s sharp drop in the official measure of retail sales ends the recent puzzlingly strong run of figures and supports the message from the more timely surveys that spending growth is back on a downward trend.”