Daily update
Daily update
- We have consumer inflation expectations surveys from the US and UK today. These will probably generate media excitement, but economically they are meaningless noise. Consumers’ inflation expectations are shaped by high-frequency purchases like food and fuel—most UK and US deflation is focused on low frequency purchases like durable goods. Inflation perceptions have more to do with the daily cost of buying a Snickers bar than the actual cost of living—although slower US food price inflation and UK supermarkets’ two-tier pricing may help lower perceptions.
- Consumers’ inflation expectations may be economically irrelevant but they have political significance. Consumers who misguidedly believe inflation is higher than reported are likely to disgruntled. As ever, the Michigan consumer sentiment data breaks down sentiment between Republicans and Democrats, and is a reminder of the (relatively recent) distortion of political polarization.
- European Central Bank (ECB) Chief Economist Lane speaks, and should be heard with the reverence due to any Chief Economist. But markets are unlikely to get any new insights, and investors are simply waiting to learn how late the ECB will be in cutting rates.
- Italian retail sales and final French consumer price data are unlikely to captivate investor attention, but there may some interest in the release of US import and export price figures.