September 16, 2022
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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
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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
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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