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The good disinflation of the Anglo-Saxons

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  • Japan's Prime Minister Abe is reported to be preparing to announce the postponement of the consumption tax increase later today. We expect an eighteen month postponement. The question is whether snap elections are also called.
  • UK consumer price data is due, and expected to show the disinflation forces of price competition in the food retail sector ("good" disinflation, rather than the "bad" disinflation of demand deficiency). It cannot last, but it boosts consumer real incomes for now.
  • US producer price inflation is expected to show the impact of lower gasoline prices - commodity import prices are impacted by the stronger dollar, and commodities carry a higher weight in producer price inflation than they do in consumer price inflation.
  • The Euro area has time to contemplate the wisdom of ECB president Draghi's somewhat dovish comments yesterday, along with the release of the German ZEW expectations survey. Meanwhile China reported a further decline in urban house prices.

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