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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Jul 09 2013

German Inflation Jumps, Nears ECB Target

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

After spending much of 2012 at or above the ECB’s target inflation rate of 2%, German inflation dropped below target in January, and has since remained there. However, in the past two months, inflation has risen noticeably, partially due to strong wage gains in the Eurozone’s largest economy. Despite the recent increase, the Bundesbank expects inflation to stabilize below the ECB’s target rate.

The latest update to the GEFIG clarifies the future trajectory of German inflation, indicating whether the recent rise in inflation will continue, or if the uptick will soon be reversed.

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