Payden & Rygel: Tracking inflation in three key economies

Payden & Rygel: Tracking inflation in three key economies

July 21, 2025

Inflation
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Investor focus this week shifted back to tariffs as US trade talks dominated headlines. According to Payden & Rygel, this renewed attention to trade policy coincided with a wave of inflation data releases for June from major economies including the US Canada and the UK. Notably, goods prices which had been declining in previous months rose across all three countries.

Despite the increase in goods prices both Canadian and US CPI readings came in line with central bank targets. Payden & Rygel note that this stability can largely be explained by a moderation in service prices. In Canada shelter costs a key component of services have returned to their pre Covid monthly trend. In the US shelter prices have fallen below the long term trend for the first time in this cycle.

The UK presents a contrasting picture. As highlighted by Payden & Rygel services inflation remains elevated while goods prices are also rising. This combination resulted in a core inflation reading for June that was hotter than expected underlining persistent price pressures in the services sector.

As investors grow increasingly concerned about the inflationary effects of tariffs Payden & Rygel emphasize the importance of looking beyond goods prices alone. In developed economies services account for a much larger share of consumer spending. It is therefore plausible that continued disinflation in services could offset temporary goods price increases allowing overall inflation to moderate in the near term despite tariff related risks.

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