September 16, 2022
EA: Inflation Impulses Diverge in Aug-22
- EA HICP inflation was revised up by 6bps in the final print for Aug-22, although that was masked in the rounding at 9.14%, unlike the surprise HICPxT rise to 9.3% (117.55).
- Underlying inflationary impulses diverged in August as France surged ahead of slowing Germany. Meanwhile, Italy picked up, and Spain eased.
- Fiscal support should help truncate the upside in EA inflation, allowing base effects to work through. Still, the ECB hawkishly faces a worryingly resilient core pressure.
By Philip Rush
September 14, 2022
UK: Inflation Squeezes Less in Aug-22
- UK inflation undershot forecasts for a change, as the CPI and RPI rates slowed in August. The news was more mixed for us, with small offsetting surprises.
- Some past shocks are not repeating, with negative payback compounding the effect on transport prices. Underlying inflation remains far too high, though.
- CPI inflation is in line with the BoE’s August forecast, while the new energy price cap has hacked down the peak. Forceful rate hikes should moderate after Sep-22’s jump.
By Philip Rush
September 13, 2022
UK: Labour Levels Knocked Down
- The UK unemployment rate was shockingly cut by 0.2pp to 3.6% in July amid resampling effects rather than genuine change. Participation of the over 50s has crashed further.
- Vacancies continue to trend down while the stabilisation of wage settlements suggests that the labour market cycle will still move towards burning out soon.
- Inflation is consuming pay rises for most workers. The energy price guarantee will avoid some intensification and lessen second-round effects from firms trying to keep up.
By Philip Rush
