Slight downside surprise versus market expectations but really nothing too unexpected. The underlying inflation story remains moderate short-term disinflation. There is not much sign the initial raft of tariffs have had much of an effect on consumers, with goods prices a little easier.
While the headline rate pushed up and there was a move higher in services, core inflationary pressures looked relatively stable in April. Future pressures look equally contained, in part reflected in steady PPI output prices. Sterling has been weakening but the rate of decline has, thus far, has been fairly measured
Eurozone April inflation matched the increase the market was expecting, notably core which now stands at its highest level in 43 months. But this really flatters the overall picture given the increase in package holiday prices (notably in Germany) which lifted the recreation component of core this month, alongside an overall uptick in corresponding services.
Modest downside surprise on both headline and core but not really anything material. Underlying inflationary pressure remains well contained with the recent rebound driven largely by shelter. Ex-ing that out and inflationary pressures look even more contained.
Another downside surprise for inflation. While the headline y/y rate moved up to 1.49%, core PCE was flat on the month which took the y/y rate back down to just 1.553%. That’s enough to round it up to 1.6% on the wires but it’s still the lowest print since Sep 2017.
Modest downside surprise in the consumer price numbers but really not that significant. There is little underlying price pressure now the full effects of earlier sterling depreciation have washed through. The main variance continues to come from energy/fuel prices.
In 1969 the US population was 125mn smaller. You also need to go back to 1969 to find a lower jobless claims number.
Price data basically confirms what we knew, inflation is back in a moderating phase with dip in core highlighting that. Income a little below expectations but the underlying wage story remains constructive, so nothing to be concerned about. Although in terms of Fed priorities the pick-up in wage growth is not enough to offset broader demand concerns.
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