CONSUMER STAPLES: Barry Callebaut; 1H25 (to Feb) results

The lower-than-expected core CPI reading of 0.23% M/M (0.27% MNI median, 0.45% prior) came with a modest upside surprise in core goods (0.22% M/M vs 0.16% expected, 0.28% prior), driven largely by used cars (0.88% vs 0.54% expected), while apparel also rebounded (+0.6% after -1.4%) and new cars were fairly steady (-0.1% after 0.0%). 

• Core services were more benign however at 0.25% vs 0.31% expected (0.51% prior), with supercore as noted earlier slowing sharply.
• The main contributor in the services slowdown? Airfares, which was basically the only major category that analysts didn't expect pull back vs January - they fell 4.0% M/M for an 8-month low (after +1.2% in Jan. That alone shaved 0.05pp off core CPI.
• Though auto insurance was softer than expected as well at 0.3% (1.0% expected, 2.0% prior).
• Neither of those however are inputs into PCE so that may cast less of a dovish angle on the release.

• The main rental inflation metrics were very close to expectations in February, with both OER and primary rents at 0.28% M/M vs average analyst estimates of 0.30%.
• The weighted average of these two series has in turn averaged 0.29% M/M for four months now, back to the 0.28% averaged in 2019 and 0.27% over a longer period of 2017-19.

Prime Minister Sir Keir Starmer has said that he is "disappointed to see global tariffs" on steel and aluminum from US President Donald Trump. Speaking at prime minister's questions, Starmer says, 'We will take a pragmatic approach... we're negotiating an economic deal... we will keep all options on the table'. 

• In contrast to the EU, which imposed retaliatory countermeasures immediately following the US' imposition of its own tariffs, the UK has refrained from imposing its own trade levies in response to Trump's actions.
• As NYT notes, Starmer may view the potential of a trade deal with the US as a way to avoid future tariffs. Trump commended Starmer's efforts to avoid the imposition of tariffs on British exports during his late Feb White House visits, even though these exertions did not pay off in the short term.
• Starmer will also be looking to avoid confrontation with the US as he seeks to improve US-Ukraine relations and steer Washington towards ceasefire talks and an eventual deal that takes into account Ukrainian interests and ultimately ensures security guarantees for Kyiv.
• The lack of UK retaliation will be noted in Brussels and other EU capitals. Since coming to office in July, Starmer has sought to bolster post-Brexit ties with the EU. For some member states, the UK acting as a bridge between the US and EU could be seen as an economic threat over the medium term should the UK secure a trade deal.