UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Seeping taxes, suspending data'
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Aug 13, 2025 The show dives into the latest US consumer price inflation data, highlighting how trade taxes are influencing prices, notably in appliances and tires. It reveals that while US appliance costs have surged, counterparts in major economies have not. Interestingly, auto prices are unaffected by tariffs due to timing, with older inventory still on the lot. The conversation also touches on the implications of delayed labor market data and the anticipated inflation reports from Europe, suggesting potential growth trends.
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Tariffs Are Showing Up In Consumer Prices
- Tariff costs are being passed through to US consumers quickly in expected sectors like tyres and appliances.
- Some prices, like bananas, rise more than tariffs justify, suggesting second-round inflation effects.
Inventory Clear-Outs Amplify Price Spikes
- Tyre prices spiked after pre-tariff inventory was cleared and US banana prices rose faster than tariffs alone would explain.
- These patterns hint at both immediate pass-through and potential broader inflationary feedbacks.
Timing Explains Sectoral Price Differences
- US appliance prices rose since March while Mexico, Canada, EU and UK saw declines, showing tariff impact varies by country.
- Auto prices haven't reflected tariffs yet because many cars sold now are pre-tax stock arriving before tariffs applied.