Deterioration in business and household sentiment has spread not only to southern European countries that have been burdened with the debt problem but also to core European countries, including Germany and France. As a result, firms’ business fixed investment has decreased and weakness in private consumption, particularly of durable goods like automobiles, has become pronounced.
In particular, they allow the data to “speak” and thereby more accurately identify persistent movements in inflation that reflect the evolution of macroeconomic variables important to monetary policy (Chart 2). Still, each measure was judged to have limitations, so we decided to use a set of measures, instead of relying on a single one.