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European Inflation Remains Disappointing

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European Inflation Remains Disappointing

Eurozone members are individually reporting inflation data en masse this morning and with the exception of some peripheral countries it isn’t boding well for the overall pace of European price growth.

Ireland has just published it’s Consumer Price Index (CPI) for the month of March, the year on year figure has turned to a positive 0.2% from a negative -0.1% the previous month. The pick up in Irish economic activity since exiting the bailout program is clearly evident in the month on month number which is now running at 0.7%, up from February’s 0.5% price growth. Ireland is the only country that also posted it’s Harmonized Index of Consumer Prices (HICP) data today, this is a crucial number as it is the official statistic used by the European Central Bank in it’s policy deliberations. Ireland’s HICP for March is a stable 0.1% month on month and 0.6% year on year, both of these readings are the same as February.

Portugal, which is preparing to follow Ireland out of the EU/IMF bailout process, has also just published some encouraging price index data. The month on month Portuguese CPI for March has sharply picked up to 1.4% price growth from a contraction of 0.3% last month. The year on year number however still has a way to go to get back into positive territory, today’s reading remained negative at -0.4%.

Earlier this morning Greece published a disappointing CPI report showing that annualized price inflation had moved further into negative territory. Markets had hoped that the February reading of -1.1% would hold for another month but this in fact slipped back to -1.3%. The real surprise however was the when the harmonized calculation was used the Greek inflation number becomes a more troubling -1.5%.

Closer to the core of Europe and more likely to affect the overall Eurozone inflation situation, France recorded a significant fall off in it’s CPI, the drop in the annualized figures from 1.1% last month to just 0.6% this month will no doubt raise concerns at the ECB.

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