- US CPI rose by a bigger than expected 0.9% m/m to 6.2% y/y (from 5.4% in September). The main driver was sharply higher food and energy prices up 0.9% m/m and 4.8% m/m respectively. Energy prices contributed to around one-third of the monthly increase in CPI. However, even excluding these components, core CPI rose by a more than forecast 0.6% m/m (4.6% y/y). The inflation in the core components came mostly from higher new and used vehicle prices, up 9.8% y/y and 26.4% y/y respectively, reflecting supply chain disruptions. Higher housing costs (3.5% y/y) and medical care (1.3% y/y) also contributed to more broad-based core inflation. We expect food and energy prices to keep CPI elevated through the end of 2021, but to soften next year. Supply chain issues are likely to remain a source of inflation for longer.
- Germany’s inflation was in line with expectations at 0.5% m/m and 4.5% y/y in October, unchanged from September. The main driver was energy prices, which rose 4.0% m/m, but which are expected to moderate in 2022.
- Japan’s PPI rose by more than forecast in October, up 1.2% m/m and 8.0% y/y, compared with 6.4% y/y in September. This is the highest producer inflation in 40 years. Oil and coal prices were key drivers of producer inflation, up 44.5% y/y. Businesses are expected to absorb the higher costs for now.
- US initial jobless claims declined to 267k in the week to November 6, a new pandemic low, but came in higher than forecast. The data suggests that more people are finding work as benefits expire and new Covid infections slow.
Today’s economic data and events
11:00 UK GDP (Q3) forecast 1.5% q/q and 6.8% y/y
11:00 UK industrial production (Sep) forecast 0.2% m/m and 3.1% y/y
13:00 ECB publishes economic bulletin
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Daniel Richards
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