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Inflation above average?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Lots of inflation figures today – if only there were an international bestselling book that could lay bare the Truth About Inflation. Heading the list is the US core PCE deflator measure, because this is known to be favoured by the Fed.
  • Consensus expectation is for the core PCE deflator to come in basically in line with its 20 year average. In fact most inflation indicators in the US (ex oil) are at or above their 20 year averages. US Fed Funds are not, of course, near their 20 year average.
  • Euro area CPI is also due. The ECB focuses on the headline rate (claiming it is more relevant given Euro area pay bargaining structures) – they may regret this insistence as oil prices, and thus headline inflation, start to move up. For now the headline should stay negative.
  • Japan showed some strength in its data on consumer spending and production. Australia revised Q1 growth data higher (is everyone revising higher nowadays?), with stronger net exports part of the story. That has implications for regional economic growth.