Archive

March 20, 2024
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UK: Sticky Services Persist in Feb-24

  • UK CPI inflation slowed 0.1pp further than expected to 3.4% in February amid soft goods prices, but services prices were strong again by only easing to 6.1%.
  • Underlying inflation pressures remain sticky, with the median inflationary impulse stuck close to 3%. These data remain inconsistent with a sustainable return to the 2% target.
  • Proximity to the target relies upon the temporary drag from falling energy prices and is not a reason to cut. Wage growth is too high, fuelling resilience that postpones cuts.

By Philip Rush

March 19, 2024
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Russia: Putin 5.0

  • Vladimir Putin’s election victory reflects not only rigging but also the reality that many Russians see no alternative. Neither the Ukraine war per se nor a deteriorating non-war economy is likely significantly to change this as the President sets his sights on another election victory in 2030.

By Alastair Newton

March 18, 2024
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EA: HICP Converging Close to 2%

  • In the final print, headline EA inflation was confirmed as slowing by 0.2pp to 2.6%. The 0.1pp of upside from the flash was genuine and even worse in services.
  • January’s divergence in the underlying inflationary impulse was resolved with clustering nearer 2%, potentially consistent with a sustainable return to the inflation target.
  • Lower energy costs may flatter the picture, while strong services inflation suggests wage growth remains too high. We still see the ECB’s first cut rolling to September.

By Philip Rush

March 14, 2024
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On A Slow Boat To China

  • As expected, this month’s National People’s Congress did little to alleviate China’s immediate economic malaise. Furthermore, it confirmed Xi Jinping’s determination to follow a course that owes more to his obsession with power than his longer-term economic vision.

By Alastair Newton

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