Snickers bars and inflation perceptions

Daily update

The IEA announced it would orchestrate a record release of oil from strategic petroleum reserves. Another three ships were attacked in the Gulf. Oil prices rose over USD100/barrel. In the absence of a coherent US strategy to reopen the Strait of Hormuz, investors are likely to focus on Iranian actions as the market driver.
Yesterday’s February US consumer price inflation data was as expected. The lived reality is somewhat different from the headlines. Owners’ equivalent rent helped lower inflation, but this is a fantasy price no one pays. Used car prices fell, but US households do not buy a used car every month. Grocery price inflation has accelerated recently, with big increases for beef, coffee, and chocolate. A Snickers bar’s price is important in shaping inflation perceptions.
Consumers should maintain spending levels in the near term because savings rates can be adjusted to afford tariffs or gasoline prices. There is a limit to how long this can go on. Asian countries are trying to moderate demand—things like working from home, which increases efficiency and lowers energy consumption.
The US is investigating additional tariffs against the EU and China—though these will not hit consumer prices for some time. Bank of England Governor Bailey, a proper economist, is to speak.