Alternative inflation metrics raise concerns even as central banks stand pat

It was a busy end of July for global monetary policy, but ultimately the world’s central banks opted not to pivot into another inflation-fighting tightening cycle – despite resurgent oil prices and warning signs flashing from both alternative data and the financial markets.

The Inflation Sentiment Index, published by Permutable, is a real-time signal that converts global news flow across thousands of sources into a structured score. As prospects for peace in the Persian Gulf began wavering, this index ticked notably higher for the US and some European countries.

CEIC now has comprehensive Inflation Sentiment Index coverage for about 100 regions. It provides strong historic correlations to reported CPI. CEIC’s proprietary, high-frequency nowcasts tell a similar tale. They’re pointing to an uptick in July headline inflation across the board. Meanwhile, long-term sovereign bond yields surged. These factors might explain why Kevin Warsh faced unprecedented early dissent in his second meeting as Federal Reserve chair.