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Inflation fun

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Chinese producer price inflation turned positive. Suggestions that this heralds a shift in global inflation forces are nonsensical. Chinese exports, on a very generous interpretation, lowered global inflation pressures 0.04% last year. China's positive impact on inflation through demand also has to be considered.
  • The US has retail sales data today. The figures are expected to bounce back from a weaker August reading. However, with rising healthcare costs it is possible that consumer spending rises without equivalent strength in retail sales, as the household budget is diverted.
  • US producer prices give a better indication of pricing power for equity investors than do consumer prices (most listed companies sell to other companies, not to consumers). Positive momentum is expected to continue.
  • The great UK Marmite crisis of 2016 is over (after 24 hours) with a secret deal on pricing post the collapse of sterling. One of the many European presidents has declared that there should be a hard Brexit or no Brexit. As rallying cries go, it is not really on a par with "Once more unto the breach, dear friends".