CPI Edge

Make Inflation Forecasting Easy

[CPI Edge @CPI_Edge]

🔹️Feeling the pain of higher variable rate mortgages by households but hey someone gotta start using public transportation 🔹️Hoping real wages rise once productivity miracle appears 🔹️Meeting / CPI release schedule makes tomorrow's inflation numbers largely irrelevant🤷‍♂️

[CPI Edge @CPI_Edge]

🇦🇺RBA hiked 25 bps to 4.6%

🔸️Picture from movie Furiosa Saga: Mad Max (shot in Australia), courtesy of Warner Bros DID NOT appear in the presser despite questions about stagflation

Highlights from press conference:

🔹️Seeing big demand impulse (data center buildout)...

[CPI Edge @CPI_Edge]

with the prospect of productivity improvement 🔹️Middle East conflict came just when inflation was going to go to target (2.5%) 🔹️One way to cause a drop in aggregate demand is to hike rates drastically. Downside is: it tanks everything with it

[CPI Edge @CPI_Edge]

AUS CPI is due on Wednesday, terribly lagged given the moves we are seeing in the refined products.
Fuels will be contributing to higher inflation rate both in Aug and Sep and at some point the pass through will start to show in the prices of other goods, foods in particular.

[CPI Edge @CPI_Edge]

🇦🇺Will Reserve Bank of Australia hike rates tomorrow?

Yes if you look at the prices of petrol and diesel in the last 2 months.

2-year government bond yields trade at 5.08%, highest since 2011 so markets too are pushing for hikes...

[CPI Edge @CPI_Edge]

@sterlingwallst this is 2 years old or more...
times have changed

[CPI Edge @CPI_Edge]

Agriculture runs on diesel
Transportation runs on diesel

Retail diesel prices in the UK are close to all time highs...

Energy curves are still in backwardation.

How much is this assumption worth for UK inflation forecasts?

[CPI Edge @CPI_Edge]

@oguzerkan silver is the next one?

[CPI Edge @CPI_Edge]

5️⃣Geopolitics
Yeah the theme of the decade.
Will the upcoming Trump - Xi meeting change anything here?
Unlikely

[CPI Edge @CPI_Edge]

2️⃣ The long end...
10 and 30-year rates have risen substantially in the US and the rest of the developed world.
Even 🇯🇵Japan and that tells you something!
Mark to market books show losses.

Hyperscalers competing for capital, issuing debt and this too is driving yields higher

[CPI Edge @CPI_Edge]

3️⃣ Private credit - are these portfolios liquid or not?
What if LPs want to redeem?
Loans to software companies - what are they worth given the rise of Claude code and Codex....

4️⃣ AI concentration
Semis & other across the AI value chain account for 20%+ in the S&P 500 index

[CPI Edge @CPI_Edge]

What are portfolio managers worried now about?
1️⃣ Is inflation back?
After a few years of "stable" inflation in the 3% zone, are the dynamics worsening?

Energy shock is profound with diesel prices at all time highs globally.

Shipping rates are through the roof.

No off-ramp

[CPI Edge @CPI_Edge]

UK imports over 40% of its food from abroad. Vegetables and fruits from Spain, the Netherlands, Morocco. Atm, Food inflation is running at just 1% YoY. Looking at typical fuels->food lead, this will not last long,.. Food prices could be significantly higher in the coming mths

[CPI Edge @CPI_Edge]

UK agriculture runs on diesel.

98% of commercial farm businesses used red diesel, on average 13,000 litres per year.

For the last few years at the pump diesel prices averaged around 140 pence liter.

Today, the price stands at 190p, a 35% increase.... (1/2)

[CPI Edge @CPI_Edge]

Busy September for central banks globally resulted in Bank of England requesting early access to inflation data for August.

Energy prices spike.
Food prices changes at lows..but for how long?

CPIH: 0.5% MoM
CPIH: 3.3% YoY

Recap of the most interesting data within UK inflation

[CPI Edge @CPI_Edge]

Pre-release access...

Bank of England received data a few days in advance on an exceptional basis... - the main takeaway from 🇬🇧United Kingdom Aug-26 inflation update.

The print was not surprising:

CPIH at 0.5% MoM and 3.3% YoY.

Full story:

https://t.co/XvEAXmaB5f

[CPI Edge @CPI_Edge]

Core PCE... Fed's preferred inflation measure..

What is our current CPI, PPI translation into Core PCE?

Check full story at:

https://t.co/BYZdLkkl0v

[CPI Edge @CPI_Edge]

Delta for RPI will be bit lower as the category that includes airline fares (Fares and other travel costs) has a number of other prices (parking fees, ferries etc) that overall lower its monthly volatility.

full story:
https://t.co/ZQFwjf90G8

[CPI Edge @CPI_Edge]

🇬🇧UK Dec-26 index day and its impact on 07.3.3 Passenger transport by air and broad inflation measures

If departure day falls on 2026-12-08 then MoM change for 07.3.3 Passenger transport by air at the moment is priced at: 35.3%

If departure day falls on 2026-12-15 then...

[CPI Edge @CPI_Edge]

MoM change for 07.3.3 Passenger transport by air at the moment is priced at: 53.3%

This implies over 9 basis points difference in MoM CPI and similar for YoY CPI using this component weight at 0.52%.