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May 13, 2025
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UK: Tax Not Breaking Cost Pressures

  • Underlying unemployment rates are broadly stable, despite higher headline and underemployment rates, where the latter lacks relevance to disinflationary pressures.
  • Activity levels are expanding healthily and redundancies fell in April, suggesting no substantial jobs impact from the NICs rise, contrary to dovish fears.
  • Wage growth should slow to accommodate some of the tax cost increase, but there isn’t much evidence yet. Total pay growth is little changed in recent years.

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

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