UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Choppy markets, in choppy waters'
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Oct 22, 2025 UK inflation took a surprising dip, influenced by airfares and food discounting trends. Loyalty-card promotions reveal disparities in food prices that official data miss. The gold market is experiencing volatility amidst shifting central bank strategies and global demand. Additionally, uncertainty surrounds Trump’s potential meetings with international leaders like Putin and Xi. Meanwhile, the US dollar's interventions are under scrutiny as Argentina struggles with a peso crisis. Tune in for insights on these pivotal economic developments!
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Recorded Inflation Fell As Discounts Went Broad
- UK September headline inflation was more modest than expected due to food price moderation and weaker airfare drops year-on-year.
- Supermarket discounting broadening into general discounts reduced recorded inflation without greatly changing consumers' price experiences.
Measured Food Inflation Overstates Consumer Experience
- Official food CPI excludes loyalty-card discounts while the British Retail Consortium index includes them, creating a gap in measured versus experienced food inflation.
- Most UK households hold loyalty cards, so experienced food inflation has been notably lower than official data implied.
Gold Holds Gains Amid Central Bank Demand
- Gold's sharp sell-off slowed but prices remain well above levels from a few months ago and fundamentals still support higher prices.
- Central banks prefer gold as a safer dollar asset than US Treasuries while US rates are expected to fall and the dollar not strengthen.