More problems for the ECB as the CPI rises again

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More problems for the ECB as the CPI rises again


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(Kitco News) – Data was mixed in Europe this morning. First, Germany missed expectations on its latest GDP reading, recording 1.5% growth against analysts’ expectations of 2.0%.

The nation is suffering from new lockdown measures due to the Delta variant of the coronavirus. Although uptake of the vaccine has improved, there is still some way to go before reaching the adoption levels seen in other countries like the UK or Israel.

The result was still better than the -2.1% of the previous quarter. The report said this was due to the increase in final consumption expenditure by households and government.

Elsewhere, EU GDP topped estimates by 1.5% to reach 2% for the quarter. According to the Eurostat report, “Among the Member States for which data are available for the second quarter of 2021, Portugal (+ 4.9%) recorded the largest increase compared to the previous quarter”.

On the CPI front, the annual figure rose to 2.2% when the analyst consensus estimate reached 2.0%. This could pose a problem for the ECB if inflationary pressure persists over time. The ECB’s new inflation strategy has indicated that it will take housing costs into consideration among other things and it appears that there has been an overrun.

Oliver Rackau, German chief economist at Oxford Economics, tweeted: “Today’s upside surprise to eurozone second quarter GDP will dominate the news, but weak core inflation is arguably the most critical data point (although the pullback in non-energy goods inflation probably overstates weakness given the base effects of last July’s surge).

PIB allemand (QoQ) (Q2) 2% vs exp 2,0% vs prev-2,1%

EU CPI (YoY) (July) 2.2% vs exp 2.0% vs prev 1.9%

PIB de l’UE (QoQ) 2,0% vs exp 1,5% vs préc -0,3%

EU unemployment rate (June) 7.7% vs exp 7.9% vs prev 8.0%

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