Archive

May 02, 2025
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EA: April’s Awkward Core Rebound

  • Resurgent services offset falling energy prices in April to deliver a surprisingly stable 2.2% rate, breaking the usual correlation between energy price moves and surprises.
  • Surprises skewed positively across the Euro area, compounding the underlying signal from core inflation, which has reversed its weakness from the previous two months.
  • The headline news is modest, and the composition won’t derail the ECB’s June cut, but it demonstrates the ongoing inflation problem that should truncate the easing cycle.

By Philip Rush

April 16, 2025
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UK: Price War Dents Spring Inflation

  • A supermarket price war hit food prices, slowing UK CPI inflation below the headline consensus again. Upside news in clothing was offset by downside in game prices.
  • Repeating 2008’s experience would drive a game price rebound, but the food effect is more likely to persist. The median inflationary impulse should also rebound soon.
  • Unit wage costs remain inconsistent with the target, while energy and water utility bills will drive a massive jump in April. We still forecast a final 25bp BoE rate cut in May.

By Philip Rush

April 16, 2025
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EA Disinflation Confirmed For ECB Doves

  • An unrevised final HICP print confirmed the disinflationary space driving the ECB to cut again in April, despite growing desire to slow easing before it becomes stimulative.
  • The median inflation impulse remains at, or slightly below, the target. However, other statistical measures are stickier and labour costs are fundamentally growing too fast.
  • EURUSD appreciation compounds disinflationary energy price pressures to trigger another likely slowing in April that might dovishly surprise the consensus again.

By Philip Rush

April 10, 2025
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US Travel Crashes Inflation In Mar-25

  • Downside news from February’s US CPI print extended into a March crash with a 0.2pp undershoot at -0.05% m-o-m, not just because of a 2.4% m-o-m fall in energy prices.
  • Hotels joined another sharp fall in airfares to drive the core inflation weakness. The late Easter appears responsible, similar to 2023, ahead of an April resurgence.
  • Market participants are unusually unfazed by data that does not reveal the impact of substantial policy changes. Resilience should damp dovish hopes for cuts returning.

By Philip Rush

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