Inflation in the US easing against all odds
Macro Insight
QuantCube’s macroeconomic intelligence platform (MIP) detects easing inflation pressure in the US
The word “Inflation” became the core of current debates for the global economy as the world progresses with COVID-19 vaccination programs. Inflation rates reach high levels in many countries as they start to recover from the recession caused by the pandemic. The sharp economic bounce-back was somewhat expected due to the gravity of the pandemic, but the level of inflation spike came as a surprise after years of inflation running well below the level expected by central banks. The upward inflation pressure was mainly driven by energy prices, but it led to some concerns on both sides of the Atlantic.
Since it delivers nowcast data, QuantCube CPI index has been anticipating monthly trends and providing insights in advance compared to official releases while beating the consensus in 62% of all cases.
QuantCube Inflation Outlook
QuantCube indexes indicate that US Inflation has reached a plateau and has started to ease slightly, while inflation in Germany and France show an accelerating trend.
US Inflation
As the graph below shows, QuantCube US CPI index rose to about 6.0% in August 2021 vs. 0% observed in January 2021. However, since mid-August this year, we note a slight easing in inflation pressure with the index retreating to 5.6% in early September. This suggests that the high inflation we recently observed is likely to be only temporary and most likely was caused by the spike in energy prices.
French Inflation
QuantCube French CPI index is overall on the rise since the beginning of this year. As you can see in the chart below, it reached the first high in May.After a pause during the summer, the inflation accelerated again to reach 1.8% on August 31, 2021, consistent with the official data of 1.9%.The first estimated values for September show a slight decline.We will continue to monitor the trend to see if this is a temporary one-off dip.
Methodology
Using the methodology jointly developed with the inflation linked team at Credit Agricole CIB, QuantCube tracks the world inflation in real-time by processing the most volatile components for inflation such as energy prices, but also prices for fruits, vegetables or travel packages. Incorporating the insights from this untapped data allows us to identify the key drivers of inflation changes.
Our CPI nowcasting estimates real-time inflation on a daily basis, therefore it is able to predict the inflation outlook a few weeks in advance of the official numbers and also ahead of the first consensus data. QuantCube CPI is an extremely reliable indicator with very high correlation with inflation. The nowcasting provides asset managers and asset owners valuable insight into the real economy and helps these investors detect early signs of regime changes for Fixed Income strategies.
