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These Six Euroarea Countries Are In Outright Deflation As Eurozone Inflation Slides To Four Year Lows

Tyler Durden's picture


While we realize that the world has long since stopped caring about trivial things like macro events or newsflow, it probably should be noted that while everyone was either sleeping or awaiting to see what the US response to the Crimean referendum would be, it should be highlighted that inflation in Europe just tumbled once again to a fresh retest of 4 year low levels. According to Eurostat, final February inflation was lower than the flash reading, and printed at 0.8% for the Eurozone and 0.7% for the Euroarea, down from 0.9% and 0.8% respectively. This is back to the October level when the ECB decided to cut its interest rate to a record low of 0.25% in its November meeting. As Reuters noted, inflation has not dropped below that level since November 2009, when it stood at 0.5 percent, Eurostat said.

This is how European inflation, or lack thereof, has looked in the past four years:

Yet any one expecting an immediate response by Draghi may be disappointed: Bloomberg adds that the CPI reading is unlikely to immediately alter the monetary policy stance of the ECB. It fails to create a fresh cyclical low with the reading of October also having come in at 0.7 percent. The core reading remained unchanged at 1 percent.

Others agreed. From Reuters:

"The downward revision to the February inflation figures is unlikely to be enough to trigger further near-term monetary easing," said Martin van Vliet, senior economist at ING. "This will also require a deterioration of the activity and or a further significant strengthening of the euro."


A strong euro has weighed on prices, and the currency fell in reaction to Monday's data, dipping against the dollar and paring gains against the yen.


Month-on-month inflation was 0.3 percent in February, driven by a 0.5 percent rise in prices of services and a 0.4 percent increase in costs of non-energy industrial goods.


Prices of food, alcohol and tobacco fell 0.1 percent on the month, while highly volatile energy costs inched up 0.1 percent.


In February, there were four euro zone countries with negative annual inflation rates, Portugal and Slovakia both with -0.1 percent, Greece with -0.9 percent and Cyprus at -1.3 percent.


"Today's CPI figures are a clear reminder that low inflation may have become the new normal for the euro zone - which certainly won't make it easy for some countries to reduce their debt overhangs," van Vliet said.

And while the world awaits the ECB to do something, anything, be it negative rates or outright monetization of German bonds (good luck), the Euro area continues to sing in disinflation and outright deflation. 12 of the 18 countries of the monetary union saw a decline in the year-over-year rate of inflation. Ten of the 18 countries registered rates under 1 percent and four of the 18 countries registered negative numbers. The largest “core country” — Germany — saw its inflation rate decline to 1 percent from 1.2 percent.

Worse, 4 Eurozone countries, Cyprus, Greece, Portugal and Slovakia, were in outright year over year deflation. And then add Bulgaria and Croatia to get the 6 Euro Area countries where prices are now in outright decline compared to a year earlier.

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Mon, 03/17/2014 - 11:52 | 4558855 fijisailor
fijisailor's picture

Looks like Bulgaria should vote to join the Russian Union.

Mon, 03/17/2014 - 11:54 | 4558868 666
666's picture

With things the way they are, I often think the USSA should vote to join the Russian Union.

Mon, 03/17/2014 - 12:05 | 4558931 Ignorance is death
Ignorance is death's picture

I'm sure a good old war can set this right in no time, only how could it be started....oh got it...

Mon, 03/17/2014 - 12:15 | 4558969 Soul Glow
Soul Glow's picture

Deflation as measured similar to how the US measures it - CPI, right?  No food and oil in the components, right?

Yeah, deflation.  Ha.

Mon, 03/17/2014 - 12:16 | 4558982 Abi Normal
Abi Normal's picture

It could be true, as the bottom falls out, those economies will take a nosedive, everything will be devalued!  Deflation is a bitch, although it may sound good, just wait till pennies become popular again...

Mon, 03/17/2014 - 12:23 | 4559028 Soul Glow
Soul Glow's picture

In terms of what though?  Dollars?  Euros?  Yen?  Rubles??

Sure, there is deflation in various asset classes - housing, sales, etc - but there is no deflation in the price of oil, and thus the pressure is on the currencies.  If there is pressure on the fiat money system, if the fiat money system is imploding, then at the end of the day, it matters not how deflation is measured, because it can not be.

Mon, 03/17/2014 - 13:58 | 4559581 Abi Normal
Abi Normal's picture

Agreed, but today we have devaluation of the currencies (QE,etc), thus pennies on the dollar will become meaningful one day, just an observation of future value. so dollars, yes.  I say once reserve status is lost, we all take a huge haircut in USSA.

Inflation is rampant now, and desireable according to the Fed, who does not count food or fuel in CPI, which is stupid. All things considered, low employment participation aside, our debt will have a day of reconning, maybe 2020 as the actuary said, who knows.  If we don't blow ourselves up or get blown up by something from outerspace, or a mega-volcano, first.  LOL, I try not to worry about it all too much anymore.

Mon, 03/17/2014 - 12:45 | 4559142 Ghordius
Ghordius's picture

Soul Glow, in europe inflation is measured including energy and food. in fact, that's the component that makes out the biggest recent change, by -1.2%, if I remember correctly

fact is that energy (and in part food) prices have declined in the eurozone in the last months. if they go back to older levels, all this "horrible deflation talk" is moot

meanwhile someone smuggled the UK in that chart. not in the eurozone, they are proud users of the GBP, aka British Pound

Mon, 03/17/2014 - 14:43 | 4559836 Oracle 911
Oracle 911's picture

I live in Slovakia, I don't feel the deflation. No wonder it is 0.1%, on the other hand the other countries are flat broke or have big problems.

Mon, 03/17/2014 - 15:05 | 4559929 frenzic
frenzic's picture

That's why taxes on energie and water are up again. Can't have serfs being better off period. There's elections for the European parlement coming up that's why there's talk of declining prices and a better economy. None of that is true except maybe for the base costs of energy (for once) excluding taxes and transport. Naturally we do get to pay those nice government related costs. Sure some grocerers have some specials but they have to get some people to buy their crap. Have you seen how many stores are closed and can't get new tennants. The UK is the trojan horse of the Eurozone whether you like it or not they get to sit at the table and brief the USA.

Mon, 03/17/2014 - 12:27 | 4558936 DoChenRollingBearing
DoChenRollingBearing's picture

Print, Draghi, print!

Why, Germany makes great machines (Gildemeister).   Order some big ones with real capacity.  

1000 Euro notes?  That could solve the problem.

Mon, 03/17/2014 - 12:47 | 4559161 Ghordius
Ghordius's picture

printing and then throwing money at problems solves everything... until it doesn't anymore. in the long run, we are all dead, right?

Mon, 03/17/2014 - 13:35 | 4559442 DoChenRollingBearing
DoChenRollingBearing's picture

I should have put in:


Mon, 03/17/2014 - 12:38 | 4559088 Hayabusa
Hayabusa's picture

Hmmm, lets look at exactly who deflation benefits and then decide what's good for for whom.  Since 2008 QE has been the norm, the banksters are hoarding cash... lots of cash.  The prices of things keep increasing for the 99% forcing them to spend what they have. 

If I was in the 1% I'd be hoarding cash like crazy, speculating and hoarding more cash, and when deflation kicks in full force and all kinds of things from cheap labor, to housing, etc., can be scarfed up for a fraction of what they once went for - then the rich will own/control everything/everyone because they can buy everything/everyone up with their cash.  My advice... generate as much cash NOW as you can and hoard it!  One day deflation will rule here in the U.S. as well as the rest of the globe... in the great depression cash was king - as it will be again. 

You gold/silver bugs... the world rulers aren't going to give up control to PMs... they are not just hoping for deflation at the right time, but instead actively planning and making it happen - when it does, what are your PMs going to be worth when everyone is hungry and flat broke?  Not much... the grocery store only takes cash for food, not PMs and when deflation hits hard having a pile of cash will be essential to survival.  When ur forced to sell it, the CRIMEX et all will quitely buy it up and when they have "purchased it all back" only THEN will the price go up... until then expect the continuuing smackdown to continue.

Remember they make the rules, we are simply pawns - ignore what the 1% say and instead pay attention to what they do then attempt to extrapolate why they are doing it via self-preservation and what's best for them, not you.  From there, you can make some pretty decent decisions for yourself/family.

Mon, 03/17/2014 - 14:16 | 4559688 Abi Normal
Abi Normal's picture

You speak words of iron, it shall be life!

Mon, 03/17/2014 - 11:53 | 4558865 Seize Mars
Seize Mars's picture

Statist economists change definitions to suit themselves. For deflation, they really mean some characterization of the money supply is going down. But they will say it so you think consumer prices are going down. But they aren't!!!

Mon, 03/17/2014 - 12:01 | 4558910 ParkAveFlasher
ParkAveFlasher's picture

Bankruptcy and unemployment are deflationary downstream, but if you're a banker sitting on free money with no one to lend it to, throw a party, while you can!

Mon, 03/17/2014 - 11:55 | 4558871 NoDebt
NoDebt's picture

I tellin' you, these guys had better get with the QE monetization program and RIGHT QUICK, too.  They're clearly losing the "race to debase."

Mon, 03/17/2014 - 11:56 | 4558876 medium giraffe
medium giraffe's picture

"A strong euro has weighed on prices, and the currency fell in reaction to Monday's data.."

Fell upwards towards last week's highs? 

Mon, 03/17/2014 - 11:58 | 4558890 Dr. Engali
Dr. Engali's picture

I'll bet you the people with no jobs and no money aren't feeling any deflation.

Mon, 03/17/2014 - 11:59 | 4558898 Spungo
Spungo's picture

We can't let the credit bubble deflate because deflating would cause deflation. We need to make the bubble bigger because bigger bubbles never pop.

Mon, 03/17/2014 - 12:03 | 4558924 NoDebt
NoDebt's picture

Back when I was a kid I was raised by my depression-era Grandparents.  I remember my Grandfather talking about how prices were falling, people were going hungry, sometimes eating things made with sawdust and stuff like that.  He tells me that a loaf of bread could easily be bought for a penny.  To which I asked "then why the heck were you eating sawdust?"  He responded:  "If you don't even have a penny, you can't spend it on a loaf of bread.  So we ate sawdust."  There was pretty much no way to argue against that kind of logic.

Mon, 03/17/2014 - 12:08 | 4558948 centerline
centerline's picture

That is why the inflation/deflation arguments get so stupid at times.  The reality is that average guy is always a penny behind.

Mon, 03/17/2014 - 12:47 | 4559163 LawsofPhysics
LawsofPhysics's picture

Please, this is not like the great depression (when people could go live off the fucking land, like many did).

It wasn't a global market either and there weren't 7+ billion people competing for the available resources.

Please, pull you head out of your ass.

Mon, 03/17/2014 - 12:18 | 4558999 Abi Normal
Abi Normal's picture

Yup, please refer to my post above...obtaining a penny will become an event! 

Mon, 03/17/2014 - 13:05 | 4559275 Anusocracy
Anusocracy's picture

Obtaining Penny from The Big Bang Theory would be an event.

Mon, 03/17/2014 - 12:46 | 4559156 Pie rre
Pie rre's picture

When I was young we went to the butcher shop and asked for any bones usuitable for resale for the dog then made broth for soup afterwards the dog got them.

Mon, 03/17/2014 - 12:48 | 4559171 LawsofPhysics
LawsofPhysics's picture

Some people simply ate the dog.

Mon, 03/17/2014 - 12:04 | 4558926 Just1N
Just1N's picture

Those 5 should hold a referendum to join Rusia. Problem solved. :)



Mon, 03/17/2014 - 12:06 | 4558935 Rising Sun
Rising Sun's picture

Deflation has been going on for years.


The gubermint keeps fucking with the CPI to show otherwise.


The gubermint is running out of fingers to plug the leaks.


Here we go for the deflation slide folks.....weeeeeee!!!!!   weeeeeeeee!!!!!

Mon, 03/17/2014 - 12:10 | 4558955 centerline
centerline's picture

Deflation is the primary trend (real world).  Everything else right now is monetary (currency) smoke and mirrors.

Mon, 03/17/2014 - 12:16 | 4558985 LawsofPhysics
LawsofPhysics's picture

"Deflation is the primary trend (real world)." - Right, because the cost of maintaining a high standard of living is going down?!?!  I don't think do dipshit.

Mon, 03/17/2014 - 12:34 | 4559022 centerline
centerline's picture

You are looking from a perspective that is purely monetary.  And I agree from that perspective.  But, in the real world, the demand for debt is dropping.  We are long past the point of debt saturation.  Pensions are going to get wiped out.  The governments around the world are going to grab at wealth however they can.  Etc.  All deflationary.  Velocity (as in the textbook definately of the 'flations) is getting clobbered.  The housing bubble and now higher education bubble are the death throes of the current financial system.


Mon, 03/17/2014 - 12:44 | 4559144 LawsofPhysics
LawsofPhysics's picture

"But, in the real world, the demand for debt is dropping." - WRONG.

 There are 7+ billion people all competing for a higher standard of living and all the resources that make that possible.  Since it is a DEBT IS MONEY world, there is plenty of demand.

"The housing bubble and now higher education bubble are the death throes of the current financial system." -


Mon, 03/17/2014 - 13:06 | 4559245 centerline
centerline's picture

lol on the optimist thing!  I suppose so.  But, yeah this could grind on in one form or another for decades absent a black swan event.  Depends on where one lives too.

But, all it takes is a head-out-the-window analysis to reveal that the debts are simply not sustainable.  It requires organic growth (population, productivity, etc.) that is simply not possible.

Massive inflation already happened behind the scenes in the shadow banking realm.  The housing bubble and college education bubble are cramming down more debt that otherwise would not be taken.  Bubble after bubble since 2000 as organic growth (leverage) rolled over having already replaced organic growth in the 80's.

Now, the developed world is facing untold trillions in "promises" that are not going to be kept.  Expect governments to take everything they can by force to keep the party going.



Mon, 03/17/2014 - 13:52 | 4559540 Kirk2NCC1701
Kirk2NCC1701's picture

Yup, "Debt=Money".  If you add the effects of FRB*, it means that the Debt Machine must be fed.  It's in its very 'DNA'.

Especially if the Debt Machine is Fed fed.

* Fractional Reserve Banking (for the uninitiated)

Mon, 03/17/2014 - 12:09 | 4558949 SimpleSimon
SimpleSimon's picture

Where is Ukraine???  Oh, that's right....it is now part of Russia....

Mon, 03/17/2014 - 12:11 | 4558958 LawsofPhysics
LawsofPhysics's picture

"Deflation"?  Bullshit, name one society/currency that collapsed/died because their purchasing power was too strong.

Please, in a "debt is money" world, there is no such thing.

Roll the motherfucking guillotines...

Mon, 03/17/2014 - 12:16 | 4558988 Johnny Cocknballs
Johnny Cocknballs's picture

jeezus, why is 2% the yoy target?

The economy is too important to be left to economists and "technocrats."

All those countries need more deflation. Lots more. 

They also need to leave the EU and chase out the bankers wielding pitchforks and torches - old school.

Mon, 03/17/2014 - 12:39 | 4559117 centerline
centerline's picture

Frog in boiling water.  Each degree over 2% and more and more frogs start getting concerned.

Deflation = banksters don't get frog soup.  So, that can't be allowed to happen.  They make thier money on money creation, not money destruction (or evasion, or hoarding, etc.).

Mon, 03/17/2014 - 12:56 | 4559224 Ghordius
Ghordius's picture

jeezus, why frigging not? what's the matter with you? when it comes to the EUR you too start to rant on the EU. they are two frigging different clubs, dammit!

the one is a treaty-based club of sovereigns and the other is a treaty-based club of national banks. we could shut one of the two without peril for the other "project"

why are you asking for moar deflation, of all things? all we freaking ask from the ECB is to make monetary policy aimed to keep prices stable

staabeeeleeeteee, bitchez!

that 2% target is just a damn political consensus target, then 0% is too near dreaded deflation, as you can hear all around you, "making debt service more difficult" (as if your local banker would not adjust rates to expected inflation)

Mon, 03/17/2014 - 12:18 | 4558996 Cocomaan
Cocomaan's picture

I've noticed a hell of a lot more stories about random, tragic events over the past two weeks. The ones that seemed to be stuck on repeat.

  • Malaysian airliner (huge, ongoing story, taking up a lot of airtime everywhere)
  • Manhattan building collapse
  • SXSW deaths

None of these has any impact on the world. They don't create or resolve trends. While terrible for the people involved, they're just noise, just like random inner city shootings.

anyone else notice this? It reminds me of all the shark attack stories immediately prior to 9/11.

Mon, 03/17/2014 - 12:19 | 4559001 The Abstraction...
The Abstraction of Justice's picture











Article 5 from the Eurostat website:


5. Data for the United Kingdom for February 2014 were not available in time for publication. Due to this fact the EU totals have been calculated using Eurostat estimates. 


http://www.bbc.com/news/business-26368709 -> 0.6% increase in UK house prices in February, or 7% inflation over the next year in UK house prices. This is why Eurostat left off the UK, its at the receiving end of the housing bubble. Nowhere on the Eurostat inflation page are house prices figured into the inflation rate which is why I say:









Mon, 03/17/2014 - 12:30 | 4559067 DoChenRollingBearing
DoChenRollingBearing's picture





Mon, 03/17/2014 - 12:57 | 4559228 Ghordius
Ghordius's picture

yes, I agree. British data is... highly suspect. it's a pity, and it distorts EU data

Mon, 03/17/2014 - 12:59 | 4559242 The Abstraction...
The Abstraction of Justice's picture

House price inflation in Germany is 5% and German wasges are steadily deflating. Its not only the UK that lies.

Mon, 03/17/2014 - 13:09 | 4559289 Ghordius
Ghordius's picture

for the majority of Germans it's irrelevant. because over 60% of them rent. and the law is strongly on the side of renters, the very reason why "it works"

so if I would build a "price-basket" for Germany, I would not include house prices too strongly or at all, then after all our continental tradition of "price baskets" is from the view of the "unwashed masses" that have to cope with food, rent, travel, etc. vs a wage

and so, yes, houses are in a bubble, in Germany. no, it's not the same problem as in the Netherlands, the UK or the US, and no, it should not be included strongly in the calculation of what "OttoNormalVerbraucher" experiences... until rent prices rise

Mon, 03/17/2014 - 13:28 | 4559400 The Abstraction...
The Abstraction of Justice's picture

Rents are increasing 5% per year too, much more in Berlin.

Mon, 03/17/2014 - 17:26 | 4560655 trader1
trader1's picture

are we talking about berlin or germany?  i thought germany...

gentrification in berlin.  unique phenomenon. not indicative of germany as a whole.  

berlin rents /=/ critical mass of average german rents.

Tue, 03/18/2014 - 03:29 | 4562094 The Abstraction...
The Abstraction of Justice's picture

Germany as a whole is seeing rent increases.

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