Archive

May 21, 2025
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UK Inflation Flies Hawkish Pressures

  • Our above-consensus forecast was exceeded by UK inflation flying higher in April amid administered price rises and postponed price increases due to the late Easter in 2025.
  • Airfares still soared 10pp more than the norm for a late Easter, and 20pp above the April average. This stoked service and core inflation, although the median was steadier.
  • We expect inflation to grind up until October, whereas the consensus assumes stability until then. Persistently excessive inflation should discourage the BoE from cutting again.

By Philip Rush

May 19, 2025
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EA Inflation Steady In Spring 2025

  • Signals about underlying inflationary pressures remain the most interesting aspect of another unrevised euro area print of 2.2% in April, with the core at 2.75%.
  • The median impulse was also steady at about a 2% annualised pace as national moves offset. Other statistical measures and wage growth remain stuck above the target.
  • We expect the ECB to cut again in June, alongside forecasts that will be lowered due to Euro appreciation. The tight labour market should discourage cutting to a loose setting.

By Philip Rush

May 13, 2025
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US Inflation Trends Stick Against Tariffs

  • A marginal downside surprise in headline US inflation measures preserves uncomfortably excessive trends, even without a significant tariff shock and with ongoing airfare falls.
  • Companies may have helpfully smoothed out the tariff shock such that volatile policy never hits consumers. Services (ex-shelter) continued to grow too rapidly for rate cuts.
  • Being in the right ballpark of the target isn’t good enough when the labour market remains tight. At least core price and wage inflation in the US isn’t as bad as in the UK.

By Philip Rush

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

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