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Global reflation Series: Inflation returning in Europe amid high unemployment

More evidence shored up since yesterday that the inflation is in fact, picking up across the European continent. Yesterday, two regions in Germany reported more than 2 percent inflation; Hesse (2.4 percent), Saxony (2.3 percent). For Germany as a country, inflation is set to grow by 1.9 percent in January. Today, reports showed HICP inflation in Spain reached 3 percent in January, French inflation reached 1.6 percent, and Eurozone inflation reached 1.8 percent in January.

Well, central bankers have been waiting and taking actions for the past seven years to bring back inflation but the timing seems to be really bad for Europe. Inflation is returning amid ultra-easy monetary policy from the European Central bank (ECB) and abrupt end to that could unsettle the financial markets across Europe, especially the sovereign bond market.

In addition to that, inflation seems to be returning at a time, when 12 out of 19 Euro members have the unemployment rate above 7 percent and the three out of four largest economies have unemployment elevated well above the regional average of 9.6 percent.

 

 

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