Archive

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

March 12, 2025
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US Lands Some Disinflation In Feb-25

  • The upwards trend in monthly US inflation of the past several months broke in February with a surprisingly steep slowing to 0.2% m-o-m, although airfares drove the downside.
  • Drift in consensus expectations is not yet obviously broken, with this outcome 0.2pp above forecasts from a month ago. A rebound after Easter remains likely.
  • Disinflation is unlikely to dissuade the Fed from holding rates in March. We doubt soft surveys will translate to recessionary conditions, so we still see no more Fed cuts.

By Philip Rush

March 03, 2025
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EA Inflation Drift And Skew Survives

  • Euro area inflation exceeded consensus expectations again in February, despite an ongoing drift up in forecasts, although the 2.4% outcome precisely matched our call.
  • ECB easing anticipated a drop below target by now, so its disappointment should exceed any relief at the 0.1pp slowing, driven by French energy bills, after four straight rises.
  • Wage inflation remains too fast to sustainably achieve the target, which should urge the ECB to slow its easing after cutting on 6 March. We still see June as the last rate cut.

By Philip Rush

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