In July 2014, annual inflation as measured by the Harmonized Index of Consumer Prices (HICP) declined in 10 of the 16 economies compared, including in the U.S., Japan and the Euro Area as a whole.
Spain experienced the largest decline in price growth (from 0.0 to -0.4 percent), returning to deflationary territory for the second time this year. Inflation in Switzerland (-0.1 percent) was unchanged, meaning that the Swiss economy also remains in a deflationary environment. Prices accelerated substantially in Norway (from 1.8 to 2.2 percent), followed by slight gains in Denmark (from 0.4 to 0.5 percent).
"In July, inflation continued to slow in most European economies compared and reached a five-year low in France, Italy, Spain, and Belgium," said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board. "German inflation has also been on a slowing path, declining from nearly 2 percent 12 months ago to 0.8 percent in July. As price growth is one factor determining cost competitiveness, slowing German prices makes it increasingly difficult for firms in the Euro Area to compete against the region's largest economy without increases in productivity or further cost reductions."
July inflation remains below 1 percent in all Euro Area countries compared, except Austria (1.7 percent). Inflation is above 1 percent in Japan (4.1 percent), Norway (2.2 percent), the U.S. (1.8 percent) and the United Kingdom (1.6 percent).
