Archive

December 04, 2025
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BoE Survey Says Stagflation Survives

  • CFOs keep telling the BoE their prices will rise by 3.5% in 2026, with wage increases similarly substantial. There has been no significant break lower in over 18 months.
  • Employment plans have also deteriorated, lending some support to the dovish case as well. But this side is an unreliable signal, while inflation has proved brutally accurate.
  • Doves need the employment aspect to be true, but the transmission to prices not to be. This survey signals upside inflation risks that should discourage rate cuts in 2026.

By Philip Rush

December 02, 2025
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EA: False Dawn For Disinflation

  • A surprise rise in EA inflation to 2.2% in November meant October’s long-awaited dip was a false dawn for a disinflationary consensus exceeded by 0.4pp since June.
  • The accumulated extent and the increase in service inflation to 3.5% are concerning, but the latest news was narrowly concentrated in Greece, with other errors being minor.
  • Stronger underlying momentum into year-end is preventing the January base effects from driving it significantly below target. The ECB’s good place isn’t breaking dovishly.

By Philip Rush

November 19, 2025
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UK Disinflationary Kool-Aid

  • UK disinflation relied on smaller utility price hikes and only went as far as the 3.6% forecast before September’s dovish surprise. It does not mean a path to 2% lies ahead.
  • A broad rebound in price increases took the annualised median impulse above 4% to average 2.5% over two months, or 3% on the year, as the underlying problem persists.
  • The BoE’s December decision pivots around the Governor, who seemingly needs upside news to avoid delivering a cut, so this outcome preserves that riskily dovish course.

By Philip Rush

November 19, 2025
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EA: Unsatisfying disinflationary snack

  • Slower food price inflation nibbled the EA rate down to 2.1% in October, while services increased to their fastest pace since April. Labour costs are still rising too fast.
  • Underlying inflation metrics are broadly a bit beyond target, risking a slight overshoot in the medium term, but the median impulse is reassuring, weighed down by France.
  • Energy prices are set to bump inflation around the target in 2026, averaging above the consensus in our view. The ECB would need tightness elsewhere to shift rates, though.

By Philip Rush

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