Industrial producer prices on free fall and stagnant output

BusinessEurope Day on the occasion of the publication of the Blueprint for Industrial Competitiveness entitled "Industry matters: Recommendations for an industrial compact". Michael Rake, Chairman of BT Group plc and President of the Confederation of British Industry (CBI), Ingo Kramer, President of the Confederation of German Employers’ Associations (BDA), Pierre Gattaz, Chairman of the Executive Board and President of the Executive and Strategic Committee of Radiall, President of the Movement of French enterprises (Medef), and Antonio Tajani, Vice-President of the European Commission in charge of Industry and Entrepreneurship (from right to left). (EC Audiovisual Services, 28/01/2014).

BusinessEurope Day on the occasion of the publication of the Blueprint for Industrial Competitiveness entitled “Industry matters: Recommendations for an industrial compact”. Michael Rake, Chairman of BT Group plc and President of the Confederation of British Industry (CBI), Ingo Kramer, President of the Confederation of German Employers’ Associations (BDA), Pierre Gattaz, Chairman of the Executive Board and President of the Executive and Strategic Committee of Radiall, President of the Movement of French enterprises (Medef), and Antonio Tajani, Vice-President of the European Commission in charge of Industry and Entrepreneurship (from right to left). (EC Audiovisual Services, 28/01/2014).

 

During the last few days, Eurostat, the EU statistical service, has produced disappointing data on the Eurozone economy. Last week it was a fall of the volume of retail sales in December by 1.6%, compared to November. Also in December last year compared with December 2012 the retail sales index decreased by 1% in the euro area. Yesterday the statistical service announced that industrial production fell by 0.7% in euro area during December in relation to November 2013. According to the same source, average industrial production for the year 2013, compared with 2012, dropped by 0.8% in the euro area and by 0.5% in the EU28.

Austerity and falling prices

Even more discouraging was the announcement that in December 2013, compared with December 2012, industrial producer prices decreased by 0.8% in the euro area and by 0.6% in the EU28. The thing is that industrial producer prices are a strong indication of core inflation developments. This is an indication that nobody referred to while discussing the disinflation issue in the Eurozone. There is a lot of talk lately going around about the falling inflation (disinflation) in the euro area. The International Monetary Fund recently warned European decision makers about the possibility of Europe’s economy entering a vicious cycle of austerity and falling prices that is negative inflation (deflation).

The issue has acquired global political dimensions with the US and the IMF openly and loudly blaming Germany, for imposing on itself and the Eurozone an unneeded austerity policy, which may prove detrimental even to the world economy. The Americans argue that the surplus European economies like Germany and others should increase their internal demand, by applying appropriate anti-austerity policies. In this way Germany is to help itself and fellow Eurozone countries in dire straits, to raise growth gear. By the same token Europe will help the entire world grow at a higher tempo. Otherwise Europe may end up in the dangerous negative part of the inflation diagram. Not to forget that negative inflation is associated with the worst real economy crisis of the last hundred years, from 1914 onwards.

Industrial prices on a free fall

Coming back to industrial producer prices, Eurostat observed that the “average industrial producer prices for the year 2013, compared with 2012, dropped by 0.2% in the euro area”. In December 2013, compared with December 2012, prices in total industry, excluding construction and the energy sector, fell by 0.3% in the euro area and by 0.1% in the EU28. Prices in the energy sector decreased by 2% and 1.5% respectively. Intermediate goods dropped by 1.7% in the euro area and by 1.5% in the EU28. Industrial producer prices (total industry) in the Eurozone, on a yearly basis, keep falling continuously after August 2013 (August -0.9%, September -0.9%, October -1.3%, November -1.2%, December -0.8%).

Let’s suppose that energy industrial goods do not represent home economic structures, because their prices are closely related to the relevant international market. According to the data of the previous paragraph this leaves us with the falling prices in ‘total industry’ and the ‘intermediate goods’. Still overall inflation rate in January was in positive grounds at 0.7%. This fact offered to Mario Draghi, President of the European Central Bank, the opportunity to dismiss the fears of deflation hitting the Eurozone. However, the ECB’s mandate states clearly that the central bank should take measures, if inflation is persistently diverging from the set target, which is 2%.

Deflation fears

Monotonously all ECB dignitaries recite that the inflation target is below but near 2%. Only yesterday the ECB cut down its inflation estimate for 2014 to 1.1%. Obviously, this is not close to 2% but Berlin doesn’t let the central bank do anything about it, like helping the south to grow again. Incidentally, inflation in Greece reached even -3.5% on a yearly basis. But Germany doesn’t care if half the Eurozone is practically in a deflation trap, as long as the Teutonic psychological deficiencies related to imaginary inflation fears, are taken good care of by the ECB.

The problem is, though, that when disinflation is to reach Germany, the situation may be irreversible, because nobody can tell what the reaction of the capital markets may be with the slightest negative indication.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

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

Technology can help us save the planet. But more than anything, we must learn to value nature

‘12 million’ stateless people globally, warns UNHCR chief in call to States for decisive action

Here are 4 of the most politically charged World Cup games ever played

Is there a chance for the West to win the war on terror?

Fake news: What it is, and how to spot it

US pardons for accused war criminals, contrary to international law: UN rights office

‘Pioneering’ former Chilean President Michelle Bachelet officially appointed new UN human rights chief

A quarter of Pacific islanders live below ‘basic needs poverty lines’, top UN development forum hears

Trust is at breaking point. It’s time to rebuild it

Why AI will make healthcare personal

ACP-EU Parliamentary Assembly: strengthening the partnership

IMF’s Lagarde: Estimating Cyber Risk for the Financial Sector

Wolves are back in Switzerland – but not everyone is happy about it

EP Brexit Steering Group calls on the UK to overcome the deadlock

Why capital markets have no more reservetions about Eurozone

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

UN Security Council ‘utterly failed’ Syrian detainees; a victim voices her plea to ‘end impunity and stop this horror’

Here’s how blockchain could stop corrupt officials from stealing school lunches

What is carbon offsetting?

Palestine refugees’ relief chief warns Security Council money to fund Gaza operations will run out in mid-June

8000 young people in the EP in Strasbourg: “a breath of fresh air for EU democracy”

Worth going ‘extra mile’ for a new Syrian constitution, UN envoy urges

Costa Rica has doubled its tropical rainforests in just a few decades. Here’s how

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Syria: Civilians bear brunt of unilateral sanctions, exacerbating ‘unparalleled suffering, destruction,’ says UN expert

Costa Rica is one of the world’s happiest countries. Here’s what it does differently

How to build a digital infrastructure that benefits emerging economies

Costa Coffee products (Copyright: Costa Coffee; Source: Costa Coffee website, Press area)

The start of the “Caffeine rush”: Coca-Cola acquires Costa Coffee days after Nestlé-Starbucks deal

Unemployment and stagnation can tear Eurozone apart if austere policies persist

How to harness data to tackle rare diseases

10 ways cities are tackling the global affordable housing crisis

Eurozone: Subdued inflation can lead to more recession

European Parliament strengthens EU consumer protection rules

Fertilisers/cadmium: Parliament and Council negotiators reach provisional deal

The next Google in biotech: will it be Chinese?

A critical European young voice on Net Neutrality: the distance between Brussels and Washington

Primary Healthcare should be strongly connected with initial education

8th Euronest Assembly: the future of relations with Eastern partners

Can a Bavarian Oktoberfest beer indulger bring down the Berlin government?

Afghanistan: UN envoy urges further extension of ceasefire with Taliban, as Eid ul-Fitr gets underway

‘Once-in-a-generation opportunity’ will be squandered, warns Guterres, unless social, economic, environmental challenges are met

Why we need to start a new pro-vaccine movement

One year on: EU-Canada trade agreement delivers positive results

3 reasons why we should vaccinate both boys and girls against HPV

FROM THE FIELD: Weaving profits in Azerbaijan

Mark Zuckerberg will be at the European Parliament today to meet President Tajani and the political group chairpersons

Will the Greek economy ever come back to growth?

‘All atrocity crimes are preventable’ and can never be justified – UN chief

This mobile laundry gives homeless people free showers and washes their clothes

We need a new approach to cutting greenhouse gas emissions: and it’s all about innovation

A multipolar world brings back the national champions

EP Group leaders on Brexit: “the agreement is not open to renegotiation”

Multilateralism must weather ‘challenges of today and tomorrow’ Guterres tells Paris Peace Forum

As fighting in Libya escalates, so does number of children ‘at imminent risk of injury or death’

South Sudan: UN condemns ‘brutal’ sexual assaults on roads to Bentiu

Link between conflict and hunger worldwide, ‘all too persistent and deadly’, says new UN report

A reflection of health inequity in recent epidemics

The world needs carbon-neutral flying. Here’s how to bring it one step closer

Malaysia can show the way towards a holistic model for human rights

The world has made spectacular progress in every measure of well-being. So why does almost no one know about it?

More Stings?

Comments

  1. Undeniably imagine that which you said. Your favorite justification appeared
    to be at the web the simplest thing to consider of.
    I say to you, I definitely get irked while other folks think about concerns that they just don’t know about.
    You controlled to hit the nail upon the top and also defined out
    the entire thing with no need side effect , other folks can take a signal.
    Will probably be again to get more. Thanks

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