00:00Nina Skero is chief executive at the Consultancy Center for Economics and Business Research.
00:05Joining us now. Hello, Nina. Let's start with the U.S.
00:08Consumer prices up 0.4 percent in August, which is more than expected.
00:12Inflation also up. Is this the impact of tariffs at play?
00:18A part of this will absolutely be the impact of tariffs with businesses basically passing off the higher fees they're having to pay on to consumers.
00:27So I think it's difficult to say exactly how much of this there is, but some of it definitely is.
00:34You know, many U.S. companies stocked up on imports ahead of those tariffs.
00:38Inevitably, those stocks are going to run out. What can we expect of prices going forward?
00:45Well, the thinking at the moment and certainly thinking of the Fed and by a lot of commentators is that the impact of the tariffs hasn't been as severe in terms of a price shock as feared.
00:57But it certainly hasn't been zero. So as you say, there is a lot of data pointing to stockpiling.
01:04That is only a very near term fix. And even those companies that have stockpiled inputs could have already raised their end prices in preparation of the fact that they know that sort of those stockpiles will only last so long.
01:19So I think that's a very, very short term sort of cushioning effect.
01:22Yeah. Let's move across to Europe. The European Central Bank keeping rates unchanged.
01:28Inflation remains as well. 1.9 percent, I think.
01:32What's your outlook for Europe, especially given some fairly big challenges?
01:36We just have to look at France, for example, and their budget problem.
01:38That's right. We're not expecting any changes in at the ECB until the end of this year.
01:47But of course, that could change depending on a few factors.
01:51So one big factor is the U.S. tariffs.
01:55We're still yet to see what the impact of those will be in terms of inflation.
01:59Certainly, there is some upside risk to inflation from that.
02:03But it is a very murky picture.
02:05There is also a line of thinking that some secondary impacts from U.S. inflation could actually, from U.S. tariffs, excuse me,
02:12could actually be deflationary in Europe if there is a lot of goods from other countries that were initially destined for the U.S.
02:20but would now be coming to the European market instead.
02:23So it's a very difficult picture in terms of tariffs.
02:26So that's one area we're closely looking at.
02:27And the other one is what's happening domestically in some of the biggest member countries, particularly France.
02:34And if the ECB will judge that it needs to support the economy with more interest rate hikes.
02:40But at the moment, they are making the judgment that despite those risks, the economy is strong enough that they can keep the course.
02:47If we look at what consumers can expect, both sides of the Atlantic, do you think that they must buckle up for higher inflation, higher prices in the longer term?
03:00If we look at the U.S. first, so I do think consumers still have some higher inflation figures coming their way.
03:07So that will be definitely be a factor.
03:10Just as concerningly, and we've heard from the Fed that this is actually their main focus, is what's happening in the labor market.
03:16We're seeing some real signs of cracks beginning to emerge in terms of the labor market strength in the U.S.
03:22And you could have those two factors coinciding, higher prices, a weaker labor market.
03:28So if you're a household that's impacted by both of those elements, it could be a quite difficult outlook.
03:34In terms of Europe, the impact of tariffs and on prices is a little bit harder to say.
03:40Certainly, so far, it hasn't been as bad as some have feared, and there is a possibility that things will stay that way.
03:48So perhaps a little bit more of a muted risk profile.
03:51Well, thank you so much for speaking to us.
03:53Nina Skero, Chief Executive at the Consultancy Center for Economics and Business Research.
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