Mises News
November 12, 2013
There was relatively good news for consumers in the Eurozone last week. Data released for the consumer price index (CPI) during October showed that the rate of inflation fell from 1.1 percent to 0.7 percent.
At a time when unemployment is high and increasing and taxation is on the rise, this brings some small relief to cash-strapped households whose real disposable incomes have been in decline for at least 5 years. It’s only a small relief. The CPI is designed in such a way as to deliberately exclude key consumer necessities like food and energy which, if included, would push the measured price inflation rate higher.
The fall in the CPI was probably caused to a degree by the rising exchange value of the euro over the period, which will have reduced the cost of imported consumer goods. That rising exchange value was itself a result of aggressive money-supply increases of other major currencies, notably the US dollar and the Japanese yen. Over the same period, the European Central Bank (ECB) kept its powder dry due to the election campaign in Germany over the summer.
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