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Economy in Brief
UK Consumer Sentiment Hits Lowest Reading since 1996
(when the GFK survey began; also lowest reading 'ever')
Of these 13 readings eight of them declined on the month in May three of them improved and two of them were unchanged...
U.S. Existing Home Sales Continue to Fall in April as Houses Become Less Affordable
The combination of soaring home prices across the nation and rising interest rates is making homes less affordable...
U.S. Index of Leading Indicators Fell in April
Five of the index's components fell in April, one was unchanged and four increased...
U.S. Unemployment Claims Rose in the Latest Week
The state insured rates of unemployment in regular programs vary widely...
CBI Gauge in the UK Continues to Be Upbeat
The global economy has a lot of challenges...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Profits and Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation and Fed Policy: A Relationship which Should Worry the Fed and Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
by Robert Brusca March 16, 2012
The chart offers clear snap shot of how much UK PPI inflation has oscillated up and down since the
financial crisis/recession. But it mostly has been too high
UK PPI inflation is running at 4.1% Yr/Yr. Core inflation is lower 3% Yr/Yr. Still the core is accelerating the headline is not, at least not for now. But Brent Oil prices are pushing higher at an accelerating pace.
UK PPI inflation has been anything but well behaved. The gyrations have been following closely the gyrations in oil.
What the BOE cares mot about is not the PPI but the HICP. Inflation on the HICP metric is off peak but the pace at 2.7% remains too strong relative to its alleged cap rate of 2%. November 2009 was the last time that the HICP was at the BOE sweet spot of 2% inflation. At a pace of 1.6% in October 2009 the HICP was last below 2% Yr/Yr. And now that seem to be ages ago.
Since October 2009 UK HICP price level index is 3.8 percentage points above its target top level for prices (that is, had the BOE run 2% inflation from Oct 2009 on). Over this period (27 months) the BOE has instead run an HICP inflation rate of 3.6% with core inflation up at a 2.9% pace. It has not all been all due to oil prices since the core rate is also way out of whack.
The BOE is way behind the curve and with a still struggling economy. Its fiscal austerity move has not worked and the economy is still in trouble with the BOE adrift in terms of this inflation pledge. It is not clear what the path to price stability will look like for the BOE.
UK PPI MFG Net Output Prices | |||||||
---|---|---|---|---|---|---|---|
%M/M | %SAAR | ||||||
Feb 12 |
Jan 12 |
Dec 11 |
3Mo | 6Mo | 12Mo | 12Mo Y-Ago |
|
PPIxConst | 1.7% | -0.1% | -0.5% | 4.7% | 7.3% | 7.6% | 18.0% |
MFG | 0.6% | 0.2% | 0.0% | 3.2% | 3.4% | 4.1% | 5.2% |
Core | 0.8% | -0.1% | 0.1% | 3.1% | 2.2% | 3.0% | 3.1% |
Brent | 8.1% | 2.1% | -2.3% | 35.3% | 17.4% | 15.4% | 40.6% |