European Inflation Has Biggest Monthly Drop On Record

Tyler Durden's picture

For those who have been following the abysmal loan creation in Europe, which recently dropped to an all time low...

... today's inflation, or rather make that deflation, data out of Europe should not come as much of a surprise. Then again, with January inflation posting the biggest drop in history, when it tumbled by a record 1.1% from December levels, even the skeptics may be stunned by how rapidly deflation is gripping the continent.


On an anual basis, Euro area inflation rose by 0.8% for the second month in a row and the 4th month of sub 1% annual inflation in a row. At this rate, Europe will enter outright deflation in a few short months.

Broken down by country:

Reuters explains:

Euro zone consumer prices fell in January at their fastest ever pace on a monthly basis, dragged down by a slump in the cost of non-energy industrial goods, keeping annual inflation well below the European Central Bank's target.


Inflation rate in the 18 countries sharing the euro dropped by 1.1 percent in January when compared with December, keeping the annual inflation rate at 0.8 percent for a second month in a row, the EU's statistics office Eurostat said.

The annual inflation rate was revised from 0.7 percent, which Eurostat released in a flash estimate on January 31.

Economists polled by Reuters expected consumer price inflation to accelerate slightly to 0.9 percent in January, a level that is still well below the ECB's target of close to but below 2 percent.

The annual rate was influenced by a 1.2 percent decline in the highly volatile prices of energy, while the monthly decline was hit by a 3.9 percent fall in prices of non-energy industrial goods and a 0.4 percent drop in the price of services.

The ECB, which cut its key interest rate to a record low of 0.25 percent in November, is expected to stay put until mid-2015 unless money market rates rise and the euro strengthens.




Italy, the euro zone's third largest economy, showed a 2.1 percent month-on-month decline, the biggest drop from among all euro zone members.


In Germany, Europe's largest economy, consumer prices fell by 0.7 percent on the month, keeping the annual inflation rate steady at 1.2 percent, with both figures coming below expectations.

And now back to Mario Draghi who which struggles to find new and improved ways of making sure European purchasing power continues to decline in light with the canons of Keynesian fundamentalism.

Source: Eurostat

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LawsofPhysics's picture

Yes, good news (well for those actually working).

Occident Mortal's picture

The UK seems to have pulled off the kind of stunt that Harrold Houdini would have been proud of.


5 years ago the UK was front and centre for a debt crisis, but here we are and the UK is at the opposite end of the chart. WTF.

tip e. canoe's picture

the best trick a devil can play is make you think its debt is not a problem. 

sessinpo's picture

Actually that is the second best trick.

The first being, that the devil doesn't exist.

The third trick is that creating more debt solves the debt problem which is why with all the printing, hyperinflation isn't occuring as it should normally.

Printed money that gets hoarded by the elite or services debt does not circulate into the economy, thus it doesn't accelerate money velocity and create broad inflation except in specific pockets.

This is why inflationist have been wrong thus far.

LawsofPhysics's picture

Please, the true "elite" (families with generations of power and control) don't hoard paper promises.   They own real assets and claims on real assets that generate revenue.  They give you paper promises to die defending what they own.

Ban KKiller's picture

Banking crime radiates from London. So naturally they maintain an aura of respectability. Cooking the books is their specialty. 

Oh regional Indian's picture

I think the Pounds indirect role in the Euro, via the half-in half-out status of the UK is the pin in the Euro Experiment Grenade. 

Two big Capital items are Labour and Currency, one is mobile and one isn't. Totally unbalanced state of affairs given the UK's combined GDP/general impact ont he Euroozone.

City of London can plobably pull it at any time, because that is the ROOT of global debt generation, all the Basel 1,2,3 etc. etc.

If you doubt that or do not know or acknowledge it, perhaps it is time to dive in.

Youtube is the new school.


LawsofPhysics's picture

Yes ORI, we are all Venezeula now.  Interesting times.

knukles's picture

Japanese model, incarnate, globally

LawsofPhysics's picture

So, the cost of living in Europe just went down?  What's unemployment again?  Did they get the cost of living down to zero? (because that's what you can afford to spend without a wage)

smacker's picture

"So, the cost of living in Europe just went down?"


Nope. The rate of increase has slowed. Disinflation, not deflation.

Rafferty's picture

True.  'Inflation' statistics are the most carelessly reported of any. Statements like 'inflation down 2%' appear regularly but can be very misleading.  As you point out, very often they refer to disinflation, and again they don't make clear whether it's year-on-year or over last month or whatever.

buzzsaw99's picture

oh good, cover for continued looting

disabledvet's picture


the whole Continent has now gone bankrupt.

Throw in a war "to the East" (and South?) Things have never looked better...

pragmatic hobo's picture

i'm sure the european people will disagree ...

Sudden Debt's picture

Yeah, that 120.000 euro Tesla car just got 3 euro's cheaper...

NoDebt's picture

Hey, look how volatile that graph got right after something happened in the late 90s.  I forget what it was.  Maybe somebody could help me out with that and win a cookie.

Spungo's picture

I don't understand what is causing this deflation. Don't prices normally go UP when everyone is poor as fuck and unemployed? 

AbbeBrel's picture

Harry Dent is right - the developed world is now full of old farts, and getting fuller.  They have:

already bought all the cheap crap they need, so now there is an oversupply of crap and it is getting cheaper and crappier...   The emerging markets have suddenly discovered that they ran out of money (or the money ran out on them) and all they are stuck with are loans in a non-native currency (like the spanish disaster of Preferentes but worse)...

Soooo as Dent forecasts - this will only change as the bulge of Old Farts disappears off the top of the demographic stack and there are more consumers.   In the meantime, Japan R US if you live in the west.

sessinpo's picture

Dent is just jumping on the bandwagon. Don't forget, Dent forecasted the DJIA to 40,000 based on demographics in two books. He extrapolates the current trend and by taking certain demographic data that supports it.

If the trend changes and his forecasts are wrong, he searches for new demographic data to make new predictions to reflect the new trend.

Village-idiot's picture

Being an "Old Fart" mtself, I take issue with your conclusions. While it's true that the Baby-Boomers are no longer spending huge amounts of money on "crap" but are instead saving their money for their pension, the main reason for the apparent deflation is the record low in the Money Velocity.

Take a look at this chart :

This clearly illustrates why the US is slipping into deflation. I would think that something similar is happening in Europe and Japan.

The public, as well as businesses are not using credit these days. The reasons vary, they simply may not be able to afford it, or, as in the case of the Baby Boomers, they simply don't need it, and when they do buy, they pay cash.

The Keynsian/fractional banking system is at fault here. I guess the geniuses running the show never thought about all these eventualities.

The Proletariat's picture

This is great for proletarian!!!!!!

The_Ungrateful_Yid's picture

Got Gold? :) 1332+ oz

layman_please's picture

estonia - inflation 1.6% while home prices are up 20% in a year. everybody, BUY NOW, before you are priced out! what could go wrong, right!?

Walt D.'s picture

Don't tell me:

1) Food prices have gone done.

2) Gas prices have gone down.

3) Rents have gone down.

4) Electricity and natural gas prices have gone down.


hangemhigh77's picture

No, you can buy an iPad for $3 less on sale.

Village-idiot's picture

Despite the crap you hear and read in the media, the Cost-of-Living Index is NOT the same as inflation.

The "dumbing-down" of society has made most people think they are the same; even the idiotic news media, who should know better, are starting to believe their own lies.

Ulterior's picture

my mortgage says - zehr gut

venturen's picture

get the BLM minion on it....they can make any kind of flation disappear!

Dollarmedes's picture

Draghi says, "This is dangerous. Fire up the helicopters, boys! I got a stack of Euros to deliver!"