UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Price perception problems'
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Sep 12, 2025 Recent US consumer price inflation shows a shift from deflation to rising prices in durable goods, surprisingly affecting consumer awareness. Food prices also saw a notable increase. The podcast critiques the Michigan Consumer Sentiment Poll, revealing how political biases shape inflation expectations. Meanwhile, the UK's economy emerges as the strongest in the G7, raising questions about the relevance of monthly GDP data, alongside cautious insights into European inflation and ECB commentary.
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Durable Goods Inflation Is Rising Quietly
- Durable goods price inflation has turned positive after 29 months of deflation and is now near 2% year over year.
- Because these are infrequent purchases, consumers are less likely to notice the price rise despite reduced spending power.
Visible Food Price Jumps From Specific Causes
- Food-at-home prices jumped sharply month-to-month, with big visible increases in items like beef, coffee and bananas.
- These rises reflect specific supply issues and imports rather than a broad US economic imbalance.
Partisan Bias Skews Inflation Expectations
- The Michigan Consumer Sentiment poll is influenced heavily by partisan bias, especially in inflation expectations.
- Changes in perceived food and fuel prices can shift partisan inflation expectations and thus confidence measures.