Norbolsa | Over the weekend, China released its October price data, showing a slight slowdown in producer price deflation (down 2.1% against the 2.2% drop expected), while the CPI rose 0.2% against the 0.1% drop expected, reflecting the effects of measures being taken to curb overcapacity and limit competition. In any case, the deflation problem is not over yet, as we have yet to see more vigorous demand. On the…
The Foundation for Applied Economics Studies (Fedea) has calculated that the non-adjustment for inflation of the Personal Income Tax (IRPF) for a family of four with a gross income of €50,000 has led to a 30% increase in the tax bill, although the effects are even greater in proportional terms for lower incomes. In its latest report, Fedea has analyzed the consequences of not updating the tax scale and the…
Bankinter | August CPI rises to +0.6% year-on-year from +0.5% previously, however, it is a tenth of a percentage point lower than expected. The Underlying Rate rose +0.3% year-on-year in August (up from +0.4% average) and registers the lowest rate since March 2021. (2) August Industrial Prices declined -1.8% year-on-year from -0.8% pre and worse than the expected -1.5% year-on-year. Bankinter’s analysis team’s opinion: The two price references show the…
Morgan Stanley| China’s economy faces a “3D” challenge: demographics, debt and deflation. Our China macro expert, Robin Xing, thinks the central government will have to partially underwrite local government debt and deploy sufficient fiscal stimulus to facilitate LGFV deleveraging and help the economy grow without debt. With this resolution, China could enter a debt-deflation spiral that puts both growth and the inflation outlook at risk. The focus of market attention…
Bankinter: CPI (July):-0.3% year-on-year vs. -0.4% expected vs +0.0% previous. (ii) Industrial Prices: -4.4% year-on-year vs. -4.0% expected vs -5.4% previous. Assessment: Both CPI and industrial prices mark deflation. The CPI fell -0.3% year-on-year, the first negative reading since February 2021, while industrial prices fell for the tenth consecutive month. This is the first time since November 2020 that both indicators have been negative. After a positive post-pandemic start in…
Bankinter : CPI +0.2% in May (year-on-year) vs. +0.2% estimated and +0.1% previous; Producer Price Index -4.6% in May (year-on-year) vs -4.3% estimated and -3.6% previous. Assessment: Inflation remains at surprisingly low levels in China, close to zero, and with some probability of entering deflation in view of producer prices. Sufficient arguments for the PBOC to lower interest rates (currently at 4.30% 5A and 3.65% 1A), which would also encourage…
The president of the Junta de Andalucía, Juanma Moreno, yesterday joined the trail blazed by the president of Madrid by announcing he will grant a 100% rebate on wealth tax. He will also deflate personal income tax, with effect from the 2022 tax return, which is the one that will have to be accounted for to the Treasury next year. According to calculations made by the Andalusian government, this tax…
Azad Zangana (Schroders) | November 2020 was the fourth consecutive month that headline inflation for the eurozone – using the harmonised index of consumer prices (HICP) – was negative. The response to the coronavirus pandemic has caused the most severe economic shock across the continent since the Second World War. Temporary factors are to blame for current negative inflation rates, but low inflation is expected to keep interest rates very low for years to come.
Philippe Waetcher (Natixis AM) | The low inflation observed in the euro zone will translate into very weak wage dynamics. Demand will be weak while health constraints will weigh on activity. A situation that will not make it possible to fix on medium-term prospects compatible with the recovery plans. Inflation is the answer. The government on this point has more power than the central banks.
Link Securities | According to preliminary data from the Spanish National Institute of Statistics (INE), the Consumer Price Index (CPI) fell to -1% year-on-year in May (-0.7% in April). The drop reflected the decline in fuel and oil prices, while food prices continued to rise. May inflation has not seen a decline to -1% since 2016. We do not rule out that the entire Eurozone could end up heading into deflation over the coming months, at least those economies most penalized by the pandemic.