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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Aug 06 2012

Low Inflation Helps Germans, but Not Rest of Eurozone

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 German inflation.

With German inflation falling to 1.7%, German consumer confidence surveys have improved of late despite the ongoing weakness in the Eurozone. The German inflation rate is also low relative to the Eurozone as a whole, where inflation stands at 2.4%. This improves German price competitiveness in that German prices are rising more slowly than those in most Eurozone countries.

The GEFIG’s latest update provides insights into whether the future cyclical trajectory of the German inflation will continue to aid German consumers, or move towards the Eurozone’s rate.

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