Factoid of the day: core and ‘constant tax’ inflation in Spain, Germany and the Eurozone.
Updata: the data are on the eurostat site, but they are somewhat hard to find. Look here and click on Economy and finance/Prices/Harmonized indices of consumer prices and you’ll find prices at constant tax rates. You’ll also find the HICP monthly data annual rate of change. Click these and click Select Data and click ‘Coicop’. Way below in the Coicop list you will find core inflation.
One of the things which baffled economists after 2008 is that inflation stayed quite high in countries like Spain and Greece. But it didn’t. When we look at core inflation (excluding highly volatile energy prices, and in this case also seasonal vegetables) or at ‘constant tax’ inflation (which excludes the consequences of increases in among other things VAT tax (look here for these increases) the data show that inflation in Spain, for instance, which up to 2008 had been quite a bit above the EU and German level, became as low or even lower. The Greek data (not in the graphs) show the same pattern, while the data also show that higher energy prices cause relatively higher inflation in countries with a relatively low price level, like Spain or the Baltics, than in countries like Germany. Mind that medium term core inflation has been slightly below the 1,9% medium term ECB target.
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