Sunday, 26 December 2010
Inflation - the lights are beginning to flash
Back in the summer of 2009, inflation across Europe seemed very subdued. All but four of the EU27 had an inflation rate of 2 percent or less, marked by a green light.
Deflation was the fear. Europe was in danger of falling prices. What could be worse than paying less for something this year compared to last year?
Things are beginning to change. Virtually all of the EU membership is beginning to see rising prices. In the chart, inflation rates between 2 and 3 percent are marked by a yellow light. Red lights signify an inflation rate of greater than 3 percent. The yellow lights started illuminating in early 2010. As the year progressed, red lights have begun to flash.
The UK has been a top inflation performer. The rate was consistently above 3 percent for the whole of 2010; a recored equaled by only Hungary and Romania. Even Greece managed to get their rate below 3 percent for two months this year.