Disinflation forces grow

Daily update

The Gulf region will be a focus in the aftermath of Western attacks on Houthi positions. Economically this does not change much in the short term. Shipping has diverted away from the Red Sea, and it seems unlikely that trade flows will adjust just because of one defensive measure. China’s trade data officially suggests some export growth, with toys and autos improving.
China’s consumer and producer prices remain in deflation. China’s consumer price inflation was positive for only a single month in the second half of 2024. The last time produce price inflation was positive was September 2022. It does imply ongoing pressure to stimulate the local economy (which may have global implications).
US producer price inflation is expected to be benign. It comes after yesterday’s CPI confirmed disinflation forces. Durable goods prices were in deflation for the thirteenth months. Television prices (which rose for nine months in 2021 before collapsing) are a visual representation of transitory inflation. Ignoring the fictitious owners’ equivalent rent, most parts of the US have sub-3% inflation.
UK monthly GDP rose a little more strongly in November. Excited journalists talk about “avoiding a technical recession.” Rational economists point out that “technical recession” is a meaningless phrase and the UK economic outlook has not really changed.