Daily update
Daily update
- German consumer price inflation is due; the state of North Rhine Westphalia showed a noticeable decline in its inflation number. Markets had been expecting inflation to increase nationally, so evidence of disinflation (even from just one state) is a surprise. Spanish consumer price inflation is also due.
- UK price data showed the dilemma faced by central banks. The BRC shop price index showed non-food disinflation (slowing to 1.9% y/y inflation) but accelerating food inflation. Central banks need to create more deflation where they can, to offset the inflation pressures they cannot control. There is a pontification of central bankers speaking today—ECB President Lagarde speaks twice. It is unlikely, though not impossible, that Lagarde’s views have changed since yesterday.
- US first quarter GDP is revised (it will be revised further in the future). Consumer spending is robust, supported by increased credit and a reduced savings rate. The core PCE deflator is part of this data, but the US Federal Reserve seems to have cast this aside as an inflation measure.
- China has reduced quarantine times for inbound visitors, and offered some other signals of easing Covid restrictions. The impact is likely to be felt in the domestic economy, as the export sector was more resilient during the restrictions.
