Eurozone to enter the winter…

Euro area annual inflation and its main components (%), October 2012 and May – October 2013.

Eurostat table

Eurostat table

On many occasions during the past few months the European Sting has concluded that the ongoing deceleration of inflation in Eurozone is a bad omen. Last time it was on Friday 1 November when Eurostat announced its flash estimate for October inflation at 0.7%, after the 1.1% for September. This was an alarming development, with the consumer prices rate of change losing one-third of its dynamic in the short interval of thirty days.

Inflation counts

According to Eurostat, “the main components of the euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in October (1.9%, compared with 2.6% in September), followed by services (1.2%, compared with 1.4% in September), non-energy industrial goods (0.4%, stable compared with September), and energy (-1.7%, compared with -0.9% in September)”. Given that the evolution of the energy prices is negative, a superficial reading could attribute the fast falling overall inflation rate to this development.

Unfortunately, the findings of a deeper analysis of the evolution of the price rate of change are even more discouraging. For many reasons the sub inflation index of ‘non-energy industrial goods’ represents better the conjuncture in any economy. In the case of Eurozone, this inflation sub index is estimated by Eurozone at 0.4% in October this year. This percentage followed a slow, continuous and tormenting downward path during the past twelve months. It was 1.1% in October 2012 and ended up at 0.4% last month.

Manufacturing

The sub inflation index of ‘non energy industrial goods’ accounts for less than the one-third of the overall headline inflation. However this indicator represents the core productive heart of Eurozone’s economy. It describes also the ability of the manufacturing industry to place its products on the home and international markets. This observation has a double meaning though. For one thing the capability of Eurozone’s manufacturing sector to keep its selling prices low is a strong indication of satisfactory competitiveness. On the other hand though, this is a warning that the demand for those products is not developing well, on both, the internal and the export markets.

                                          Weights of the main components of the euro are harmonised indices of consumer prices (HICP).

Eurostat graph

Eurostat graph

If the falling tendency of the rate of change of the ‘non energy industrial goods’ prices was accompanied by noticeable economic growth, it would have been a perfect combination. Alas, this is not the case for Eurozone. At the exception of the second quarter of 2013, all along the past three years Eurozone kept losing parts of its GDP. The small positive growth rate of 0.3% of GDP recorded from April to June this year doesn’t change the long-term stagnation outlook of the euro area economy.

Not without good reason the European Central Bank has set the target inflation rate for Eurozone at 2%. The fact that the actual inflation rate is quickly diverging from that benchmark, must have a severe meaning. The usually cautious and low tone President of ECB, Mario Draghi described the growth potential of Eurozone as weak, uncertain and fragmented. It’s very probable that the real prospects are even worse!

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

UNICEF urges all countries to provide ‘Super Dads’ with paid leave

EP stands up for democracy in Hungary during COVID-19

6 ways to drive funding to transform the fashion industry

Commission supports reform projects in Member States for more jobs and sustainable growth

Scientists studied microbes feeding on Antarctica’s first methane leak – here’s what they found

Bridging the gap: Health through technology

‘Forgotten’ pneumonia epidemic kills more children than any other disease

Is the energy industry meeting its sustainability goals?

Commission concludes that an Excessive Deficit Procedure is no longer warranted for Italy at this stage

Confidence in the COVID-19 vaccine grows in UK and US, but global concerns about side effects are on the rise

Mobile health: The future of global healthcare

Six children among 53 confirmed fatalities after Libya detention centre airstrikes: Security Council condemns attack

Why practicing medicine privately at home is still a (difficult) option?

Afghanistan probe: ‘at least 60 civilians’ killed after US military airstrikes on alleged drug labs

VP McGuinness on women’s rights: “Not an option, but a duty”

Humanitarian migration falls while labour and family migration rises

What can we do about the crisis in trust in public institutions?

6 things to know about the General Assembly as UN heads into high level week

End Syria fighting to avoid ‘even greater humanitarian catastrophe’

Egypt urged to free prominent couple jailed arbitrarily since last June: UN rights office

Recovering from COVID-19: these are the risks to anticipate now – before it’s too late

The needs, challenges and power dynamics of refugee resettlement

COVID-19 and nature are linked. So should be the recovery.

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

G20 LIVE: The European Sting covers online world news and the latest developments at G20 from Antalya Turkey

Eurozone: Retail sales and inflation point to recession

Access and hesitancy as major challenges surrounding covid-19 vaccination campaigns

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

Exchanges of medical students and the true understanding of global health issues

What will education look like in 20 years? Here are 4 scenarios

Balancing economic growth and the environment: lessons from Brazil

7 skills every leader needs in times of disruption

World’s most powerful tidal turbine pumps out greener electricity in Scotland

Cyclone Idai: UNICEF warns of ‘race against time’ to protect children, prevent spread of disease in flood-ravaged Mozambique

African cooperation on peace ‘increasingly strong’, Security Council told

Western Sahara: a ‘peaceful solution’ to conflict is possible, says UN envoy

Palliative care and Universal Health Care

Brexit: Britain and the Continent fighting the battle of Waterloo again

How the ‘California effect’ could shape a global approach to ethical AI

3.7 million lives could be saved by 2025 if health services ramp up nutrition actions: WHO

Brexit kick-off: a historic day for the EU anticlockwise

State aid: Commission approves Greek public funding for construction and operation of North section of E65 motorway

Asylum: MEPs call for more solidarity among EU member states

Iraq: Education access still a challenge in former ISIL-controlled areas

It’s time to end our ‘separate but unequal’ approach to mental health

Long-term EU budget: The Union’s ambitions must be matched with sufficient reliable funding

How cities can become more resilient to climate change

SDG progress ‘in danger’ of going backwards without change in direction, new UN report reveals

South Africa’s economy in 5 charts

Terrorist content online: companies to be given just one hour to remove it

Anti-vaccination scaremongering: What should we know about anti-vaccine argument?

Why cities hold the key to safe, orderly migration

UN welcomes ‘most comprehensive agreement ever’ on global health

Remembering Kofi Annan

EU-US ties to break over Iran; Democrats’ electoral win may not change it

MEPs demand unprecedented support measures for EU firms and workers

New UN bullying report calls for ‘safe, inclusive’ schools for all children

UN chief ‘following very closely’ reports of chemical weapons use in Syria’s Aleppo

Greece @ MWC14: Greek-born mobile champions at MWC 2014

UN rights chief Bachelet appeals for dialogue in Sudan amid reports ‘70 killed’ in demonstrations

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s