UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Disinflation (not in the US)'
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Jun 27, 2025 Japan's recent disinflation trend shows a slowdown in core inflation to 1.8% year-on-year, driven by shifts in non-fresh food prices. The discussion highlights broader disinflationary patterns in Europe compared to inflationary pressures in the US due to consumer spending and trade policy changes. It delves into how consumer habits, influenced by political views, intersect with the potential for rising inflation from trade taxes. The skepticism around trade agreements also underlines its impact on economic policies in the US.
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Japan's Disinflation Signals
- Tokyo's core inflation rate fell to 1.8% year-over-year, indicating disinflation in Japan.
- Most headline inflation was driven by non-fresh food, indicating relative price shifts rather than broad inflation momentum.
Shifting Consumer Spending in Europe
- France and Spain showed stable consumer price inflation with goods prices in deflation or minimal increase.
- Consumer priorities are shifting from goods to spending on experiences, reflecting expectations of US economic slowdown.
US Inflation vs Global Disinflation
- US inflation trend contrasts with global disinflation, showing signs of inflationary pressure.
- Consumer durable purchases surged before trade taxes, especially among Democrats, distorting spending data.