Italy Back In Deflation With Lowest CPI Print In History; European Inflation Lowest Since 2009

Tyler Durden's picture

Curious why European bond yields tumble to fresh new lows day after day (with the explicit backstop of the ECB of course, which makes fundamental analysis of sovereign solvency an irrelevant matter)? Then look no further than Italy, where as the chart below shows, not only has the economy "filled the gap" of its economy as tracked by its EU-Harmonized CPI, but at an August print of -0.2%, this is the lowest print in history, worse even than the brief -0.1%, flirt with deflation recorded just in the aftermath of the Lehman crash.

But it wasn't only Italy: as Eurostat also reported today, Euroarea inflation also dropped once again, touching 0.3%, down from 0.4% a month ago, the lowest print October 2009.


... driven lower by plunging energy costs:


Finally, concluding the trifecta of terrible data was European unemployment, which remained at 11.5%, just shy of its all time high.


Finally, the worst news: youth unemployment across the Old Continent remains at stratospheric levels, and in fact is rising in several places such as Spain, where it just rose to 53.8% and Ireland, up to 25.1%.


Good luck Mario, surely this time QE will finally work.

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maneco's picture

Good news for Italian consumers!

GetZeeGold's picture



Been here before.....after this we do Greece again.....right?

GetZeeGold's picture



I don't have a choice.....Merkel just cut off my

NoDebt's picture

If "price stability" is the ECBs stated goal, why don't they come out high-fiveing eachother in a big presser later today.  Near zero 0% inflation.... doesn't get much more stable than that.

Village-idiot's picture

I'm afraid you're using either logic or common sense. You really must stop doing that.

You need to think like a politician who wants to get re-elected. (Or a psychopath who likes to control other people.)

Groundhog Day's picture

I was just in Spain and France last week and I can assure you there is inflation in the cost of living meals are ridiculously expensive and the quantities were tiny

Ban KKiller's picture

I say sell debt to the next sucker before he wakes up. Ready, set,blow!

Buy debt, it is on sale, big time. Accountants never lie? Buy fiat! Sell money! Government debt is bullet proof...right? Cyprus is outlier...

Sudden Debt's picture

While everybody screams that deflation is bad, it's exactly what's needed to get the economy back on tracks and to let the non competitive companies go bust.

And after the carnage, the game will be reset and we'll be able to start over.

And yes... to complete the picture, some countries need to default also to start over.

The process will take about 15 years if history is a guide and rebuilding the economy another 15 years.

So in 30 years from now, if everything goes well, we'll have the prosperity we have today again.

And after those 30 years, we'll have another 10 stagnant years and another pop of the bubble.


froze25's picture

This is prosperity that we have today?

Sudden Debt's picture

In a way you won't believe!!!!

man, if you don't see we live in a very prosper society, you should visit countries in Azia, Africa or the middle east!!

I do remember how my grandparents lived and you can't compaire it AT ALL!

So if you think now is bad, you'll be in for a serious ride of your life!

ThirdWorldDude's picture

SD, hopefully your words will still be valid after the 4th turning (or this coming winter).

drdolittle's picture

What's all this including energy in the CPI? Do people use energy in Italy? And, down to 0.4% monthly. That's nearly 5% annual. Prices double in 14 years. No inflation? Am I missing something?

Oh yeah, fuck the fed and all central banks. Fiat money is a scam.

Cognitive Dissonance's picture

Yes, you are missing something. The 0.4% is the annualized rate for the month....if you believe the number.

drdolittle's picture

Ah, didn't read the fine print at the top of the graph. Thanks. Once energy starts becoming more expensive the number will be much higher.

Cognitive Dissonance's picture

Ummmm....So we now believe the 'official' inflation statistics? Isn't 'low' inflation what 'they' want to report so they are 'authorized' to crank up Euro QE?

froze25's picture

That type of unemployment will send the young masses right into ukip's open arms. The EU libertarian movement is well under way.

Village-idiot's picture

The youth are seeing that incumbent governments and old parties around Europe are just a gang of incompetent idiots; so it's time for a BIG change.

Bunghole's picture

Ctrl-P will solve that

GetZeeGold's picture



Heh heh.....the new kid is pretty freakin smart.

Tjeff1's picture

Wish we would have deflation. 

“I want all prices to drop to a nickel" - Murray Rothbard

Irishcyclist's picture

A man after me own heart.


That'll cost ye a nickel by the way.

BeetleBailey's picture

"PRINT" being the key word here.



jubber's picture

ftsemib up 200 points 

AdvancingTime's picture

It appears the central banks of the world have made the crux of their existence a balancing act. You can almost imagine these bankers standing atop a fence. On one side lays a field of inflation and on the other a deep pit of deflation.

A new round of easing by central banks to combat a slowdown in growth may again be in the cards but do not be surprised if this time it is less successful. The magic of this policy is losing its luster. More below on why this is not working.

CHX's picture

Mr. Draghi, warm up the printers, aaahh I mean: Report to work immediately.

LawsofPhysics's picture

Good news for Italian customers and "markets".

Fuck the banks and wake us when the bad debt is cleared.  Nothing else matters.

NoWayJose's picture

And let's not forget that the Euro tumbled in value, which makes every commodity and every import go UP in price??? It just shows how this number is made up for the benefit of socialized governments that hand out free money to unproductive citizens - so those citizens think they aren't falling behind as much as they actually are.

NoWayJose's picture

Central Bank definition of deflation - when the assets held by the 1% and by big banks decline in value.

texvet's picture

Pantheon Macroeconomics' Claus Vistesen, however, approaches the inflation report with a bit more caution.

"Price pressures in the eurozone remain very subdued, but it is important to note that energy prices are the main culprit for the very low inflation reading," Vistesen said. "The energy component plunged to -2.0% year-over-year in August from -1.0% in July, adding a significant drag to the headline number;  excluding energy, inflation would have been 0.6% year-over-year."

Read more:

Maybe  the increased oil  production in Libya  and  US   has  lowered  price of  Brent.   Important to look at why some costs change

LawsofPhysics's picture

Short-term, anything is possible.  Long term however, there are 7+ billion people (and growing) all competing for the resources that make a higher standard of living possible, so demand is still strong for the foreseeable future, especially for energy.  Even more so when it gets cold.

JRobby's picture

A colder than normal winter is forecast......................

smacker's picture

To hell with Italian bond yields tumbling. To hell with debtors not inflating away the value of their real debts via inflation. CPI reductions are positive for consumers, savers and millions of people.

I welcome deflation. Let's have some of it.

StandardDeviant's picture

After years of financial repression, with near-zero interest rates, it would be poetic justice for savers to finally get a real return on their money again, only this time by way of deflation.  Not great for the economy as a whole, maybe, but so be it.

Village-idiot's picture

Be careful! It won't just be the debtors that'll get burned. Debtees will also lose money as they won't get their money back after lending it out. Your money in a bank account is considered a loan to the bank, so, under the new "bail-in" rules that the G20 signed in Dec 2013 you'll probably lose anything lent to the banks.

We've all heard stories about the Great Depression of the 1930s; people stuffing their money into mattresses instead of putting it into the bank. We all laughed at those stories. Well, we're about to find out why they did that.

Slowly start taking cash out of your bank account and keep it in a safe hiding place at home. You need at a minimum 3 months of living expenses. Stockpile a few items such as food with a long shelf life, etc. But most important...tell no one about it.


disabledvet's picture

About to? Just ask Cyprus and Spain. That thing in Portugal is a mess too.

Putin is only making things worse by causing a panic for holders of anything. Next to the euro and Fukushima that guy is the best thing that ever happened to the USA since Hitler versus Stalin.

smacker's picture

The big problem with holding large amounts of cash is that you can't spend it due to the anti-money laundering laws that now exist in most Western countries. They prevent anybody from using cash above fairly low levels. In Spain and Italy it's even worse in that their govts recently reduced the upper limit down to very low levels.

SpanishGoop's picture

"... driven lower by plunging energy costs:"

Just wait, Putin hasn't made up his mind yet...


NoIdea's picture

Once Putin turns off the gas I'm sure Eurozone inflation will more than recover when they have to get a huge amount of energy from another source

SpanishGoop's picture

Draghi calling Putin "Vlad please turn of the gas we need inflazione".

Village-idiot's picture

While it's true that the CPI for Europe will rise, that's not actually inflationary. (I use the classic definition of inflation.)

As the currency leaves Europe for Moscow this may be deflationary.

ejmoosa's picture

It's been amazing to watch this world wide phenomena known as central banking.  


It's as if they have hosted a party, given the attendees all the free booze they want, have cranked up the music as loud as they can, and simply cannot seem to get us to dance.


We know the booze is cheap, and the hangover will hurt like hell, the music sucks, and we don't care to dance.


They are either gonna shut the party down, or force us to dance.


Which will come first?

Village-idiot's picture

You're assuming that they're in control.

They think they're in control.

.... I'm not so sure they are anymore.

JRobby's picture

Shutting the bitch down requires an awakening of the masses.

The sinister forces know that this will not happen. Give the masses more free shit.

constantine's picture

The good news is that we've got bankers to save us from the horror of being able to buy more stuff with our money.