UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Inflation games'
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Jul 16, 2025 US June consumer price inflation raises alarms about data quality, hinting that budget cuts may lead to price guessing. With trade taxes impacting consumers, appliance prices see their fastest rise this century. The discussion also contrasts the inflation landscape in the UK, revealing the policy-making challenges driven by changing consumer attitudes. It's a deep dive into inflation dynamics and their economic ramifications.
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Data Quality Concerns on Inflation
- The US consumer price inflation data quality is deteriorating due to fewer prices surveyed and budget cuts.
- Smaller samples and guessing prices reduce data reliability for inflation measurement.
Trade Taxes Impact Consumer Prices
- Consumer appliance prices rose at the fastest monthly rate since 2000 due to Trump's trade taxes.
- Car prices lag behind but will reflect tariffs after about three months due to supply chain delays.
Inflation Perception and Real Wages
- Real wages are still growing but spending power growth is weakening amid inflation.
- Inflation perception is muted since price shocks affect less frequently bought goods, not everyday essentials like eggs yet.