European Inflation Rate Rising

inflInflation in continental Europe has risen recently, and will continue to do so, and this should ?disturb bond traders?.

That?s the view of High Frequency Economics chief economist Carl Weinberg who believes that ?it is mathematically assured that headline CPI increases, which have been rising for the past few months, will continue to go up in the months ahead?.

Here?s a chart, supplied by Weinberg, that shows what Weinberg is talking about:

High Frequency Economics

And here?s the equivalent chart showing changes in annual core CPI: Headline CPI europe HFE core

High Frequency Economics

It?s clear that, for the moment at least, inflation across Europe is trending higher.

Weinberg believes headline CPI in continental Europe will soon exceed its core equivalent, and this may see pressure continue on Euro-area sovereign bond markets.

“Our conclusion is a reaffirmation that Euroland?s headline CPI will accelerate on a year-over-year basis, surpassing the rate of core CPI increases. This should disturb bond traders, even though there is no real inflation here ? just a trick of the maths”.