Archive

April 01, 2025
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EA Disinflates March’s Excess

  • Euro area inflation slightly undershot consensus expectations in March, consistent with the correlation of surprises and energy prices. Yet it was 7bps above our forecast.
  • Services prices drove core inflation down to 2.4%, creating some dovish space. However, the headline outcome reversed last month’s upside to match February forecasts.
  • Resilience in the real economy still justifies more cautious easing close to neutral, so we expect graduated cuts to skip April for June, but the risk of an extra cut has risen.

By Philip Rush

March 26, 2025
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UK: Low CPI As Seasonal Sales Extend

  • UK CPI inflation slowed by 15bps to 2.84%, rounding slightly under expectations. The services rate was surprisingly resilient, and January’s upside news broadly persisted.
  • Downside news from clothing and core goods prices occurred because January sales extended broadly and unusually. Postponed Spring lines should drive a March rebound.
  • Headline inflation outcomes are benign enough not to threaten the BoE’s likely cut in May, but ongoing resilience still makes that the final move in our forecast.

By Philip Rush

March 19, 2025
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EA Inflation Shrunk For Spring 2025

  • Eurostat shrunk the final Euro area inflation print for February by 5bp, rounding it down to 2.3% after German revisions, reversing the upward surprise from the flash release.
  • French energy utility prices drove this decline, and petrol prices seem set to drag it down further in March. However, the median impulse is also relatively subdued.
  • ECB policy is unlikely to be affected by this revision and the temporary impact of energy prices on inflation. We still expect it to hold rates in April before a final cut in June.

By Philip Rush

March 18, 2025
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UK Inflation Excess Survives Reweighting

  • Updated inflation basket weightings can shift the inflation outlook without any new fundamental shock. The seasonal and trend outlook is unaffected by the 2025 update.
  • Although our forecast is broadly unchanged, this still mitigates the risk that reduced weights on energy and sanitation utilities dampen the surge in April and July forecasts.
  • This outcome further emboldens our confidence in our above-consensus forecast. We also note that the average import intensity is now weighted near historic lows.

By Philip Rush

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