A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Euro Prices Pressures Up

Euro zone inflation pressures nudged higher in December but remained well below summer highs, the Economic Cycle Research Institute said on Friday.

ECRI's Eurozone Future Inflation Gauge, which forecasts cyclical turns in inflation across the 12-nation bloc, rose to 104.4 in December from 104.0.

"The EZFIG rose in its latest reading, but remains well below its August high, suggesting that Eurozone inflationary pressures are relatively subdued," ECRI said in a statement.

Official euro zone inflation unexpectedly held steady at 1.9 percent in January against a forecast for a rise above the ECB's 2.0 percent ceiling to 2.1 percent.

That was largely thanks to smaller-than-expected upward pressures on German prices from a new year VAT rise there.

In contrast, the eurozone manufacturing PMI -- released Thursday -- showed output price growth at its highest level in at least four years, fanning talk of more rate hikes from the European Central Bank.

A Reuters poll on Wednesday showed the ECB raising rates by 25 basis points to 3.75 percent in March with a fair chance of another to 4.0 percent by mid-year [ECB/INT].

ECRI said easing inflation pressures in Germany and France were partly offset by a rise in Spanish and Italian inflationary pressures.

In Spain, the inflation gauge jumped to 167.9 from 161.8 in November with more upward pressure likely to come in coming months, ECRI said.

The euro zone gauge uses a weighted average of ECRI's indices for Germany, France, Italy and Spain.