While there may be inflation concerns here, in Europe and Japan, deflation is front and center

Euro Zone

The global recovery from the pandemic has sparked a surge in inflation, but it’s a welcome respite for the European Union, which has spent the past decade flirting dangerously with deflation.

Given that the yearly inflation rate was negative at the start of this year, a brief stint above target is the least of Europe’s problems.

While headline inflation in May was above 2%, core inflation (ex food and energy) is still below 1% year over year.

Japan

According to a copy of Japan’s economic and fiscal roadmap acquired by Reuters, the government would commit to take action “without hesitation” to avoid the economy from slipping back into deflation.

The administration will also pledge to “strive” for budgetary reform and express optimism that the Bank of Japan will meet its target of 2% inflation.