Daily update
Daily update
- Yesterday’s US producer price inflation numbers added to a general sense of disinflation. However, the lower inflation reported in consumer and producer prices will not be fully experienced by consumers. The slowing fantasy price of owners’ equivalent rent does not affect real world spending power. Seasonal adjustments deliberately distort reality, and so disinflation here does not change consumers’ inflation experiences.
- US import and export prices are due. Neither take account of tariffs, which are consumer taxes layered on after these prices are recorded. Most of the consumer price for an imported good covers costs incurred after the good reaches the US. Michigan consumer sentiment will continue to detail political polarization. Inflation expectations data is not detailed along party lines, but polling evidence suggests Republicans think inflation a far bigger threat than do Democrats.
- The Bank of England’s inflation attitudes survey is due. Lower household energy prices have been more visible, and may have influenced the data.
- The Bank of Japan announced it would reduce bond buying—the reduction scale will be determined at the next meeting. This may be an additional form of policy tightening (depending on what is happening with liquidity demand), but reducing purchases to around two thirds of current levels should have a limited bond market impact.