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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 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 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

April 03, 2025
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US Tariff Impact Estimates

  • New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
  • Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
  • Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

By Philip Rush

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