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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.

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Dec 05 2013

Fresh Off Recession, Spain Enters Deflation

ECRI has just updated its Spanish Future Inflation Gauge (ESFIG). The value of this forward-looking gauge lies in its ability to predict cyclical turns in Spanish inflation.

With Spain only recently exiting recession, the country suffered a setback in October, entering deflation for the first time in four years. This has raised concerns of a deflationary phase in Spain as European Central Bank (ECB) President Mario Draghi reiterated his expectation this week that the Eurozone, where consumer price growth is higher, “may experience a prolonged period of low inflation.”

The latest update to the ESFIG clarifies the future trajectory of Spanish inflation, indicating whether October’s deflation is the start of a deflationary period or an anomaly soon to be reversed.