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.


Rick said...

Is this based on CPI or RPI? Also do all nations use the same methodology?

Alice Cook said...

Good question Rick.

It is the harmonized CPI. So it is the same methodology across all countries.

The data source is Eurostat.


manfromthefuture said...

inflation will get worse everywhere. the uk november borrowing figures show that the government are all talk and no trousers on "cuts" and they cannot pay their bills from tax receipts alone. to avoid interest rate rises on bonds (which will happen anyway), they are printing money. it is likely that some sort of QE2 is going on here on the sly regardless. all this catches up sooner or later as inflation. everyone else is doing this too.

check the price of anything that cant be watered down or made smaller; petrol, gas, electricity, meat, bread, etc.

dearieme said...

1) National Savings & Investments stopped selling index-linked savings certificates in 2010.
2) The Bank of England pension scheme plunged into Index-linked Gilts in 2009.

So no surprise, surly?

dearieme said...

My dear Alice, that was a typo - I am not suggesting that you are surly.

Alice Cook said...

At least you didn't call me Shirley. Did you hear about the Bank of England pensions? If true, very shocking.