Pro Perspectives 4/19/23

Please add to your safe senders list or address book to ensure delivery.  

April 19, 2023
The March UK price data, released early this morning, showed double-digit inflation. 
This was the Wall Street Journal headline …

Given that the Fed (the global interest rate anchor) is clearly contemplating the end of the road for the tightening cycle, a big inflation number in Europe, in a month that should have reflected tightening global credit conditions, set off some alarms.  Rates went higher, stocks went lower and commodities went lower – globally.

But it was a false alarm. 
By this time next month, it's a good bet this same reading in the UK will have plunged
Why?  The "base effect."
The April inflation data will be measured against a significantly higher data point from twelve months prior.  
Here's a visual, for perspective …

Even if April (this month) were to bring about a hot inflation number in the UK, the year-over-year CPI will likely land somewhere within the white box on this chart below.  So, this time next month the media will be talking about an acceleration in the trend of "disinflation" in the UK.

PS:  If you know someone that might like to receive my daily notes, they can sign up by clicking below …