Imported costs in Japan, cautious rate policy in the euro area and softer United States grocery spending show that price pressure is not moving evenly through economies.
Economics & Markets··Morning
Inflation measures are not moving together
Japan's core inflation excluding fresh food rose to 1.6% in June and headline inflation to 1.7%, while the measure excluding food and energy eased to 1.7%, its lowest since August 2022. With subsidies limiting pass-through, energy prices fell 0.1% while producer prices rose 7.1%. The split between energy-sensitive and underlying gauges, and between producer costs and consumer prices, shows that pressure cannot be reduced to one rate and its transmission remains uncertain.[3]
The central bank waits as household budgets tighten
The ECB held all three rates, saying energy prices remained above pre-conflict levels and the shock's full effect was not yet visible. Lagarde pointed to meeting-by-meeting data rather than a preset path. In the United States, Albertsons cited food and fuel pressure as it cut earnings guidance from 2.22-2.32 dollars to 1.75-1.85 dollars, projected a 0.5%-1.5% identical-sales decline and saw shares fall over 20%. One company does not represent the national picture.[2], [1]
One pressure, different transmission channels
Producer costs in Japan are rising faster than the consumer energy gauge, Albertsons reports food and fuel pressure weakening grocery demand, and the ECB is waiting for data. Cross-country percentages should not be combined; their transmission paths are the useful comparison. The developments do not cause one another; subsidies or local demand may explain part of the split. The observable signal is whether producer costs reach consumer prices, policy decisions or grocery volumes.[1], [2], [3]
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