Daily update
Daily update
- The British Retail Consortium shop price index (measuring prices in selected stores in the UK) sank to a 0.2% y/y rate. Is this the end of profit-led inflation? Profit-led inflation occurs when retailers use a dominant narrative to disguise profit increases when raising prices. However, at some point, price increases become the dominant narrative and consumer rebellion defeats margin expansion.
- The collapse in inflation in the US, the UK, and Europe has been miraculous, but cost of living remains a politically toxic subject. Consumers focus on price levels (especially for high frequency purchases) and the ending of margin expansion may slow inflation without lowering prices to levels consumers believe to be “fair”.
- Preliminary June Eurozone consumer price inflation should show a modest slowing—as the German data did yesterday. This argues for more rate cuts from the ECB, not to stimulate but to keep real rates stable.
- The US job openings data (JOLTS) are due. The survey response rate for this data is so low it makes non-farm payrolls data look precise. The numbers have reflected declining labor market churn. Federal Reserve Chair Powell, ECB President Lagarde, and Banco Central do Brasil President Campos Neto are on a panel together. At least, Campos Neto is a qualified economist.
