Archive

June 11, 2025
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US Consumer Pricing Still Ignores Tariffs

  • Another downside surprise in headline US inflation reflected the lack of pass-through from tariff increases, with headline and core rates of only 0.1% m-o-m in May.
  • Commodities, less food, energy and car prices stalled as airfares and apparel fell again. But services (ex-shelter) inflation stayed too high to be consistent with the target.
  • Low headline rates raise dovish political pressure and the risk of a cut, but the tight labour market should encourage the Fed to keep rolling potential cuts later.

By Philip Rush

June 03, 2025
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EA: May Be Disinflation’s Return

  • Negative payback in services inflation dragged the headline EA rate down to 1.92% in the May flash. Although only 7bps low on the day, releases last week had cut 0.1pp.
  • Inflation now looks set to spend a few months below the target rather than at or even above it, as had seemed likely until recently. This is not because of re-rooted imports.
  • Euro appreciation and low energy prices have expanded the ECB’s room to cut rates, but we still see June as the final one amid tight labour markets and peers backing away.

By Philip Rush

May 21, 2025
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UK Inflation Flies Hawkish Pressures

  • Our above-consensus forecast was exceeded by UK inflation flying higher in April amid administered price rises and postponed price increases due to the late Easter in 2025.
  • Airfares still soared 10pp more than the norm for a late Easter, and 20pp above the April average. This stoked service and core inflation, although the median was steadier.
  • We expect inflation to grind up until October, whereas the consensus assumes stability until then. Persistently excessive inflation should discourage the BoE from cutting again.

By Philip Rush

May 19, 2025
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EA Inflation Steady In Spring 2025

  • Signals about underlying inflationary pressures remain the most interesting aspect of another unrevised euro area print of 2.2% in April, with the core at 2.75%.
  • The median impulse was also steady at about a 2% annualised pace as national moves offset. Other statistical measures and wage growth remain stuck above the target.
  • We expect the ECB to cut again in June, alongside forecasts that will be lowered due to Euro appreciation. The tight labour market should discourage cutting to a loose setting.

By Philip Rush

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