The chart above is from Credit Suisse economists, who add: Read more
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The chart above is from Credit Suisse economists, who add: Read more
Well, some of them at least. One of the big determinants of whether ‘Abenomics’ manages to pull Japan from its deflationary spiral is through wage growth. Inflation can’t really kick off or arguably even begin without rising wages. One can argue about how important wage growth is, or where it fits in causality-wise — and we’ll come to that later. But it is — or will be — an important signal as to whether this three-pronged approach of the new-ish Japanese government is working.
And actually, it might be catching on. Read more
… the Japanese seek inflation everywhere.
All this talk about Japan, JGB bond yields, QE, the yen… and hardly ever does anyone throw up the following chart.
So, without further ado, here is the most important Japanese chart of all courtesy of Capital Economics… the CPI: Read more
Cheery chap, Tim Morgan, chief economist at money broker Tullett Prebon. Here’s a few charts to warm us all up on a cold February day…
In Marrakesh, there is no such thing as a fixed vendor price.
The price you pay is determined by who you are, how well you barter, and the supply and demand fundamentals of the product you’re trying to buy on that on that specific day. Read more
The Office for National Statistics is out to get the Retail Price Index… or at least the part of responsible for the ‘formula effect gap’. But before we get to the sexy stuff — involving gilts and clauses and all — a quick statistical primer is called for.
The RPI began life as a compensation index, developed as an aid to protect ordinary British workers from price increases associated with WWI. It didn’t become the main domestic measure of inflation until much later. Read more
A couple of charts from Barclays economists showing the relative contribution of food to headline and core CPI:
Everybody loves price stability.
Everybody expects price stability. Read more
Just a roundup and some quick commentary from a busy Thursday morning in US economic indicators…
First, initial unemployment claims fell to 352,000 last week. This isn’t our favourite indicator given how changes in the take-up rate can exaggerate its swings, and it tends to fluctuate a lot from week to week. Read more
Chinese inflation edged down in December, setting the stage for a continuation of cautious policy loosening to support the slowing economy, reports the FT. Consumer prices rose 4.1 per cent from a year earlier, the lowest in 15 months and well below July’s peak of 6.5 per cent. It was the fifth consecutive month of receding inflation. However, China’s consumer price index only edged 0.1 percentage point lower from November, compared with larger 1.3 and 0.6 percentage point drops in the previous two months. Analysts said that seasonal factors were partly to blame for the more moderate dip in inflation, as Chinese New Year falls earlier in 2012 than in recent years, fuelling a mini-spending splurge in December, which helped push up food prices. “This continued moderation in prices pressures is a welcome development and will increase the scope for policy to respond should growth start to weaken more sharply in coming months,” said Brian Jackson, an economist with Royal Bank of Canada in Hong Kong.
If you were expecting widespread easing of policy rates across the emerging world, think again.
Since the end of August three EM central banks have cut rates — Brazil, Israel and Indonesia – but don’t go expecting much more monetary easing, Citi has cautioned in a recent report. Read more
There’s a lot of talk about the “two-speed economy” in Australia these days, and occasionally one even hears “Dutch disease” mentioned.
Ahead of tomorrow’s FOMC statement and press conference, your (US) inflation graphs du jour:
UK CPI annual inflation came in at 4.5 per cent in April, up from 4.0 per cent in March, according to the Office of National Statistics. As FT Alphaville points out, that’s the biggest year-on-year rise since October 2008; the second-biggest one-month increase on record and a record high in core CPI. It’s also all down to a stupid seasonal quirk: A late Easter.
Kevin Gaynor at Nomura — long-standing side-kick to Bob ‘The Bear’ Janjuah — has had an epiphany.
The crisis didn’t begin in the subprime fuelled mid-naughties. Read more
Analysts, it seems, are indefatigable on the subject of inflation expectations these days.
Not that we blame them — we’ve contributed to the cacophony of opinions. And since it’s inflation week here in the US, culminating tomorrow morning with the March CPI numbers, we’ll pass along two more notes on the subject from earlier today. Read more
The LFS unemployment rate fell to 7.8 per cent from 8 per cent in the three months to February with employment increasing by 143k. The less widely-followed monthly path data showed that spot monthly unemployment rate in February fell to 7.7 per cent from 8.2 per cent. The claimant count for March was less promising but essentially flat, up by 700. Read more
Some of the MPC may be exhaling a premature sigh of relief at the widely rumoured inflation *non-fail news* out Tuesday morning.
Analysts have been quick to note that the first below consensus CPI result for 10 months (4 per cent year-on-year vs 4.4 per cent expected) was driven by a fall in food prices (to 4 per cent y-o-y from 5.7 per cent in February), especially those of seasonal food. Core CPI, which excludes food, was only 0.1 percentage points off consensus expectations: 3.2 per cent year-on-year versus 3.3 per cent expected. Read more
China raised interest rates for a fourth time in five months on Tuesday, highlighting Beijing’s push to reduce bank lending, rein in inflation and slow growth, the FT reports. The central bank said the official one-year lending and deposit rates would increase by 25bps from Wednesday, raising the deposit rate to 3.25% and the lending rate to 6.31%. Analysts said the rise came sooner than many anticipated and suggested that consumer price data for March, due next week, are higher than expected. China’s inflation rose an annual 4.9% in February, the same as in January. But politically sensitive food prices accelerated and producer prices increased 7.2% - the most since October 2008. The WSJ cites economists saying China may be nearing the end of its tightening efforts.
So what did the Chancellor actually do today to change macro-economic strategy in the UK Budget?
In one important sense, he seems to have done little or nothing. The path for the structural budget deficit has been left almost exactly the same as it was after the 2010 Budget. Therefore, the big strategic decision taken last year, which was to tighten fiscal policy by about 6 per cent of GDP over the current Parliament, has remained intact. This was the key element of Plan A, and it does not seem to have been changed. Read more
Update: The inflation number’s out — and higher than expected. February saw CPI at 4.4 per cent, RPI at 5.5 per cent, which rates are at highs not seen since 2008 or 1991 year on year, respectively. The ONS said that clothing, energy and housing costs triggered this month’s upward shift.