Daily update
Daily update
- Japanese May consumer price inflation was steady—the US style core calculation rose 0.2% y/y, meaning nearly all the inflation is food and fuel. This challenges those who point to money printing as the source of inflation—Japan’s monetary base grew rapidly in the pandemic. Printing money does not create inflation. Printing too much money creates inflation. Money demand must always be considered.
- The German ifo business sentiment measure is due. This is likely to be downbeat as news on gas supply and a general media angst will depress sentiment without necessarily depressing activity to the same extent. EU leaders have been gathering to talk (not act, of course, although Ukraine’s application to join the EU was accepted).
- UK retail sales in May seemed better than expected, but the previous month’s data was revised lower to create poor numbers. Consumer spending overall is slightly down, but there is a significant switch to spend on fuel—flexible working can reduce fuel demand, but not enough to offset prices. Add the UK government’s tax grab and the effect is deflating sentiment.
- Michigan US consumer sentiment offers the entertainment of the Republican-Democrat divide in its detail. Housing market concerns may focus investor attention on new home sales numbers.
