Back in April, Mike wrote about the US entering deflation for the first time in half a century, noting a number of other countries that were also in deflation (see here). Since then, we’ve seen several more follow – the list now reads Ireland, Thailand, Malaysia, Taiwan, US, Japan, China, Belgium, Portugal, Hong Kong, Spain, Switzerland, Morocco, Canada, Sweden, Cyprus, France, Estonia, Finland, Slovenia, Germany, Singapore and Austria (in fact the Eurozone as a whole is in deflation).
The accompanying chart shows the latest CPI inflation rates in a selection of countries, along with the rate for the same time last year. It’s clear just how large some of the downward movements in CPI have been. This is partly due to base effects, such as the decline in oil prices from last summer’s highs, but also because of the amount of spare capacity that has been created in the global economy as a result of huge falls in economic output. ‘Highlights’ from the chart include Ireland, where prices are falling at nearly 6 percent a year (perhaps we may soon see the Northern Irish heading south to shop instead of the other way around), and France and Germany, which are in deflation despite recently printing positive Q2 GDP numbers.
It’s also interesting to note that US CPI is lower than Japanese CPI.