The Eurozone: domestic demand lowflation continues

not buying has become one of the most powerfull weapons of average citizens

Real-World Economics Review Blog

The ECB officially targets medium term inflation. Inflation, operationalized as a 20 quarter moving average of domestic demand inflation (which is based upon consumer prices but also upon investment prices and prices paid by the government and is, i.e., a broader metric than consumer price inflation), has been declining for 5 years in a stretch. Up to about 2008, there was an about 2 to 3% difference between German inflation and inflation rates in countries like Spain. In Q4, 2013, the highest rate of domestic demand inflation of the larger Eurozone countries was the Finnish 2,0%. For Q1, 2014, not enough data are available for a comparison. Low wage increases and wage decreases may be a larger problem for spending in the Eurozone than low inflation.


Source: Eurostat

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