Daily update
Daily update
- US consumer price inflation data is due for November. These numbers are something of a mess. A quarter of the index is a fantasy price no one pays. Income inequality means the average price is less representative of most US households’ experience. The threat of taxes on US consumers from the next administration means this inflation data is not necessarily a good guide to 2025 trends.
- The market consensus is for more or less stable headline and core inflation rates. However, roughly half the US metropolitan areas had inflation below 2.5% in the past two months. Calculated using European methods (which ignores the fantasy housing measures) US inflation has been below 2% for six months. This numbers are important; if inflation reality is less than the headline, spending power for US households is enhanced giving a firm foundation for US economic growth.
- Japan’s producer price inflation rose in November, with positive revisions to October. However, manufacturing producer price inflation was the second lowest rate since the first quarter of 2021, suggesting a lack of widespread pricing power.
- Newswire reports suggest China may weaken its currency next year. Because China’s exports to the US are invoiced in dollars, this may not offset trade taxes (though might enhance China’s export profit margins).
