What's Eating The Euro?

by: Wall Street Strategies

By Jennifer Coombs

Across international markets, the most intriguing headline was out of Germany, which reported a substantial decline in its consumer price index (CPI) relative to a year ago. Year over year, the inflation rate is expected to slow to 0.2% in December 2014 from 0.6% in November 2014, making it the lowest rate since October 2009. A decline in the CPI is expected across international markets due to the decline in energy prices. The preliminary estimate is expected to show a 6.6% drop in energy prices in December compared to a 2.5% drop in November. Food prices are also expected to decline by 1.2% after being flat during November while the price of services are anticipated to rise by 1.4% year over year. However, month-over-month prices are expected to come in flat. What comes next is a worry of deflation, especially as the value of the euro continues to collapse. German Chancellor Angela Merkel faced some criticism this weekend over a magazine report suggesting she would be prepared to let Greece exit the euro should a far-left party win a snap Greek election. The uncertainty about Greece's future has Europe and the rest of the world concerned about where the value of the euro will go from here into 2015. For now, it's a big waiting game.