Archive

November 19, 2025
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EA: Unsatisfying disinflationary snack

  • Slower food price inflation nibbled the EA rate down to 2.1% in October, while services increased to their fastest pace since April. Labour costs are still rising too fast.
  • Underlying inflation metrics are broadly a bit beyond target, risking a slight overshoot in the medium term, but the median impulse is reassuring, weighed down by France.
  • Energy prices are set to bump inflation around the target in 2026, averaging above the consensus in our view. The ECB would need tightness elsewhere to shift rates, though.

By Philip Rush

November 13, 2025
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UK: Return To Residual H2 Gloom

  • UK GDP disappointed in Q3 at 0.1% q-o-q after the ONS revised away August’s surprise resilience and led it into a slight September fall, setting up for a soft Q4 too.
  • Residual seasonality in service sector growth has reasserted itself on the average post-pandemic path. So statistical stories seem more plausible than fundamental ones.
  • Weakness in labour market activity is more relevant. The hawkish half of the MPC probably needs disinflationary news to support a cut, but the Governor seems swayed.

By Philip Rush

November 12, 2025
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Oil: Wisdom of (Mohammed bin) Salman

  • Most analysis of Opec+’s 2 November decision is as overly simplistic as the cartel’s public justifications. Calling an unwinding ‘time out’ in 2026Q1 is by no means unwise.
  • Most notably — and despite continuing economic and political uncertainty — it is very likely that the market will be awash with oil in any case for some months to come.
  • In other words, the cartel may already have done enough to achieve its primary objective, i.e. clawing back market share at the expense of US shale producers.

By Alastair Newton

November 11, 2025
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UK: Jobless Embolden Bailey’s Cut

  • Another disappointing rise in the unemployment rate should embolden Bailey’s bias to cut rates in December. Falling net underemployment contradicts, but is easily ignored.
  • Another step down in payrolls, matched by employment this time, could be blamed on fears for the Budget. Redundancies also spiked, although vacancies are stable.
  • Headline pay growth is slowing as expected, while the monthly impulse remains excessively strong, so the hawks are unlikely to see inflation persistence as broken.

By Philip Rush

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