Temporarily Unexpected


Euro zone inflation surged past the European Central Bank’s elusive target in May, heightening a communications challenge for policymakers who will happily live with higher prices for now but may face a backlash from irate consumers.

Inflation in the 19 countries sharing the euro accelerated to 2% in May from 1.6% in April, driven by higher energy costs to its fastest rate since late 2018 and above the ECB’s aim of “below but close to 2%”, data from Eurostat showed on Tuesday.

The figure is also above expectations for 1.9% in a Reuters poll, likely intensifying talk that structural forces, not just transient factors, may be behind a surge.

“Everyone saw it coming, but still it is starting to make a lot of people sweat,” ING economist Bert Colijn said. “Inflation is returning rapidly at the moment at a time when news about economies is increasingly upbeat and labour markets are profiting from the reopening.” […]

Still, getting through this period is more a communications exercise for the ECB. The bank has already made clear that this is not the sort of inflation it is looking for after nearly a decade of undershooting its target, so policy will remain loose for years to come.

For one, the surge in inflation is temporary, even the most conservative policymakers argue.

Because everything is temporary. (h/t Chris)

David Murrell comments: Statistics Canada released its first-quarter 2021 income-and-expenditure accounts data on GDP, and the corporate media completely missed the important part of the story. The media reported that nominal GDP rose by 5.3%, but did not report that this number was composed of a 2.9% increase in the GDP price deflator, with only a 1.4% increase in real GRP (a low growth number).

20 Replies to “Temporarily Unexpected”

  1. Canadian and American governments are lying about inflation but reality will strike soon. Whatever is in that basket of goods mustn’t be on my shopping list. Apparently building materials, groceries and cars are not on the list. They say it’s 2%. I say it’s 20 – 30 %.

  2. It is about to get much worse. Russia and China called the BIS and the London Bullion Bankers Bluff on the price of paper gold or the unallocated gold scam.
    This scam has allowed the USA and London to suppress the price of gold globally.
    The BIS has caved to Russia and China on this, this will see the dollar depreciate and the price of gold will soar after June 28 2021. This means steep inflation for all imported goods.

  3. I have posted many times about Canada’s Gold Reserves and what happened to them.
    In 1965 Canada held 1023 Tonnes of Physical Gold reserves. By 1985 it stood at 500 Metric Tonnes.
    So the sell off began under PET, a big chunk by Mulroney, then the Dynamic Duo, Jean Cretin and Paul Martin.
    Paul Desmarais and PowerCorp. All of these 4 Maggots were heavily connected to PowerCorp.
    Who Really Runs Canada? And You Thought Your Vote Mattered.

    Anyway here is the story. Somebody was well taken care of with this huge scam.
    “Then There Was None” Canada Sells Its Gold.

  4. I laugh at the word “transitory”. Truth be told, EVERYTHING is “transitory”. The question is how long is “transitory” in this case? The Robert Mugabe Skool of Ekonomiks seems to be the alma mater of many of the “leaders” of the (once) free world.

    1. “On a long enough timeline the survival rate for everyone drops to zero”. ZeroHedge.

  5. Seven billion people and enough food for six. Then the fun really begins.

  6. Awk! “GRP” should read “GDP” in my post. My bad.

    There is a technical debate among economists, in the business media and elsewhere, about whether or not the latest inflation numbers are “temporary” or “structural”. The establishment media either tells us inflation is temporary, or it ignores important inflation signals altogether. Therefore central banks keep interest rates artificially low while printing more money, all the while where political and business leaders tell the public everything is okay.

    We’re about to suffer through a big time inflation. The media will not be able to hide this from us, since we will be seeing it every day.

    1. Inflation is always “temporary”. Unfortunately many people don’t wake up until the country starts printing 100 trillion dollar banknotes.

  7. The capital structure of the economy is rapidly deteriorating. Prices are going up principally because businesses are discovering that capital is not magically self-replicating. With governments hoovering up most of the available capital to flush down the drain, less is available for factory rebuilds and upgrades. Production will never keep up with demand under these conditions.

    1. NR it is much worse than that. Canada with 18 million working taxpayers owes more than all of the EU excepting Germany.
      Canada is done and will be broken up. People need to prepare for this because it is coming.

      1. If that means Manitoba can be out from under Trudeau, I’m good with it.

  8. MMT, Globalism with Covid are an unholy trinity happily grasped by statists (like Juthtin Weirdeau and Cythia Freeland) to fuck over the citizenry and ‘reset’ the world.
    They need to be made to eat their own shit because they won’t suffer one iota from hard inflation and large interest rate hikes let alone powerless winter nights and food shortages.

  9. The funny thing is that China’s attempt to control the world will end in its propping up the countries it made poor.

    China itself is a paper tiger.

    1. I doubt that Chy-Na will prop up anybody.
      China will do to the poor and down trodden what it did to the Uyghars.
      Slavery and human parts selling.

  10. Canadians will lap this up.
    Temporary Hyper Inflation.
    Look Ma,Justine has made us all millionaires..cool,we are rich…
    Why does a loaf of bread cost 2 million?
    Income tax was temporary in 1917.
    The GST was temporary,until we paid down the debt..
    The loss of all civil rights and freedoms of the individual was temporary ,for just two weeks,in 2020.
    In Geological terms..Oh yeah.