Global Data Pod Global Data Pod Research Rap: Inflation Monitor: Tariff impact delayed but not denied
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Jun 12, 2025 In this enlightening discussion, Michael Hanson, a sharp economist specializing in US and Canada analyses at J.P. Morgan, joins Raphael Brun-Aguerre, an expert on Euro-area economic trends. They delve into how May's softer inflation might not last, with tariffs pushing US core inflation to rise. The duo also explores the Euro area's promising shift toward a stable 2% core HICP, examining trade dynamics and geopolitical influences on global inflation. Expect insights on the disinflationary effects of US trade policy and central bank responses amid ever-evolving economic landscapes.
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Unexpected Global Inflation Dip
- Inflation saw an unexpected dip in the second quarter globally, contrary to earlier expectations of stickiness around 3% core inflation.
- The anticipated tariff-induced inflation surge in the U.S. hasn't materialized through May, creating a puzzling inflation dynamic between the U.S. and Euro area.
Tariff Pass-Through Delay Expected
- Tariffs are expected to pass through to prices but with delay, due to inventory building and firms absorbing some costs.
- A summer inflation surge may occur, but its peak might be lower yet more prolonged than initially expected.
Mixed Cost Absorption of Tariffs
- U.S. import prices from China have fallen recently, suggesting limited tariff absorption by Chinese exporters.
- Tariff pass-through now appears delayed and shared between retailers, importers, consumers, and exporters.