Ze, 'Ow you say, Deflation Watch. Eurozone edition

Generali

Prudent wrote: »

Love the title of the thread

Apologises if this has been discussed, I am just in from work and haven't read the whole thread. What happens to savers deposits with deflation?

The short answer is... nothing.

They probably won't attract much or any interest but the buying power of them will rise.

Prudent

Thank you. That is a relief.

Generali

The first CPI number is out from Eurostat. The Euro Area (Changing Composition) figure shows prices down slightly (0.1%) month-on-month and up just 1.2% on the year.

http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=teicp000&language=en

Now that's not the best measure IMHO and a slight single month's fall isn't deflation but it is squeaky bum time for the ECB.

Generali

The full dataset is there now (same link as above).

German CPI is -0.5% over the month. All Euro Area is -0.1% for the month.

purch

In the olden days the BUBA would have raised rates are seeing that 'shocking' data :eek:

Generali

purch wrote: »

In the olden days the BUBA would have raised rates are seeing that 'shocking' data :eek:

The Bundesbank (BUBA) had rates on a ratchet.

http://www.youtube.com/watch?v=UtKADQnjQmc

Still, German prices down 0.5% on the month looks bad. The next GDP data will be interesting as that doesn't really point to great consumption numbers. At the last print, sales were down 2.8% year-on-year.

http://www.bloomberg.com/news/2013-04-30/german-retail-sales-fall-for-second-month-as-economy-struggles.html

As consumption (not exactly the same thing as retail sales but similar) is over 3/4s of GDP there is a whiff of very bad things coming across the North Sea. TBH the comparative resilience of the UK's economy is remarkable.

purch

Generali wrote: »

there is a whiff of very bad things coming across the North Sea.

This should be enough to concentrate a few minds.

Generali

purch wrote: »

This should be enough to concentrate a few minds.

It might put a similar stop to the 'We should do everything like the Germans' voices as the early 90s did to calls to take on the Socialist parts of the Japanese miracle.

I read a thing recently which quite surprised me (no link I'm afraid).

Real GDP is up a little over 100% in Germany, about 167% in the UK and about 170% in the US since some date (1990?). Even given the reunification thing I'm surprised the UK and US are so far ahead. I'm also amazed, shocked even, that the UK is really a rounding error different from the US. I assumed the US had been streaking ahead.

Kennyboy66

Graham_Devon wrote: »

We've actually seen that rent for business premises can be re-negotiated. It's happened quite a few times over the last few years, especially with companies like JD Sports. Landlords have been forced to renogotiate as they face the danger of sending the tenant over the edge and having no rent at all.

Circumstances overtake the idealism's sometimes.

Infact, it's happened in a town near me. The landlord faced losing 5 business owners, and reduced the rate for all mid contract.

Why we have to assume this is all impossible I really don't know.

I suspect you are getting confused. JD Sports is highly profitable, and no landlord would reduce their rent in the middle of a lease.

They did however buy Blacks & Millets in 2012 out of administraion - this basically gave them freedom to negotiate new rents for those stores.

michaels

Time to dust of this thread methinks:

http://www.bbc.co.uk/news/business-22550560

Inflation 1.2% in Euroland and falling, if food and energy costs go the right way this could very soon be negative...