On March 10, 2017, I reported ECB Declares Victory Over Deflation: Hallelujah!

My lead-in comment was "ECB President Mario Draghi Declares Victory Over Deflation. That’s much like shouting hallelujah when you miss the game-winning field goal."

In the Eurozone, consumer price inflation is measured by the Harmonised Index of Consumer Prices (HICP). Harmonized means all the countries in the Eurozone use the same methodology. HICP is essentially the same as the CPI in the US.

Core HICP excludes food, energy, alcohol, and tobacco. In the US, core CPI excludes food and energy.

It's been seven months since Draghi's victory speech. Let's investigate details from the October Fash Estimate of Eurozone HICP.


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Year-over-year Inflation in services is down from 1.5% to 1.2%. The core HICP is down from 1.1% to 0.9%. Thus most of the decline in the core is due to a drop in the rate of inflation in services.

Mario Draghi, like his counterparts at the Fed, are not pleased with such results. Like all economic illiterates, the Central Banks are happiest when your money decreases in value every month.

Meanwhile, consumers are happy to see prices decline. It takes years of brainwashing to believe rising prices are a good thing.

Mike "Mish" Shedlock

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