Friday, January 14, 2011

Euro-Zone Inflation Hits 2-Year High

Euro-zone consumer prices rose 0.6% from November, pushing the year-on-year rate up to 2.2% from 1.9% the previous month, the highest annual rate since October 2008 when it stood at 3.2%, the European Union's Eurostat statistics agency said.

Although the price inflation rate is still relatively low, the ECB is particularly sensitive to inflation, as they should be. The problem is the sovereign crises have the ECB boxed in.

Here's the problem. To the degree the ECB prints money to bailout the PIIGS, they add fuel to the inflation fire. If they stop printing, the PIIGS become bacon.

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