- The Bank of England raised its benchmark interest rate to 5.25% despite a slowdown in consumer-price rises, leading to speculation about when the central bank will end its monetary tightening.
- House prices in Britain fell by 3.8% in July compared to the same month last year, the sharpest decline since July 2009, but the average house price was still higher than earlier this year.
- The Bank of Japan raised its cap on the yield of Japanese ten-year government bonds from 0.5% to 1%, causing the yield to soar to nine-year highs.
- Turkey's annual inflation rate increased to 47.8% in July, the first rise since October, due in part to a new tax on fuel.
- The euro area's economy grew by 0.3% in the second quarter, with much of the growth attributed to changes in intellectual property shifting by multinationals based in Ireland for tax purposes. Germany's GDP growth rate was zero, and Italy's fell by 0.3%.
The spike in retail inflation has raised uncertainty for investors and savers, with expectations of interest rate cuts being pushed to the next fiscal year and the possibility of a rate hike. The Reserve Bank of India projects inflation to stay above 5% until the first quarter of 2024-25, and food price pressures are expected to persist. While inflation may impact stock market returns, gold and bank deposit rates are expected to remain steady.
Australian retail sales rebounded in July, but the annual rate slowed, indicating that high borrowing costs are slowing consumer spending and not affecting the outlook for interest rates.
US inflation remains above 3% as the cost of goods and services rose by 0.2% in July, prompting speculation that the Federal Reserve may freeze interest rates to manage inflation without causing a recession.
Consumer prices in the US rose 0.2% from the previous month, and 3.3% annually, indicating persistent high inflation and posing a challenge to the Federal Reserve's efforts to curb it; core prices, which exclude food and energy, also increased 0.2% from the previous month and 4.2% from the previous year.
The Reserve Bank of Australia is expected to keep its key interest rate unchanged at 4.10% as inflation slows, but economists anticipate a final hike in the next quarter.
UK inflation has slowed to a 17-month low of 6.8%, prompting expectations of potential interest rate cuts and concerns about the impact on house prices and mortgage rates.
Mortgage rates have been decreasing and could fall further this month if inflation continues to come down.
The Australian dollar declined against the US dollar as the Australian economy slowed in Q2, indicating that the Reserve Bank of Australia may not raise interest rates further.
Australia's economy grew more than expected in the second quarter, driven by exports and investment, while household consumption remained weak due to high interest rates; however, productivity and rising labor costs remain concerns for the Reserve Bank of Australia.
Australia's economy is experiencing a per capita recession, with a drop in GDP per capita for the second consecutive quarter, driven by weak household spending and reliance on government spending and population growth.
Inflation has decreased significantly in recent months, but the role of the Federal Reserve in this decline is questionable as there is little evidence to suggest that higher interest rates led to lower prices and curtailed demand or employment. Other factors such as falling energy prices and the healing of disrupted supply chains appear to have had a larger impact on slowing inflation.
British grocery inflation fell to its lowest level in a year in September, with prices rising fastest in products such as eggs, sugar confectionery, and frozen potato products, providing some relief for consumers and the government.
Brazil's annual inflation in August was lower than expected, giving the central bank more leeway to extend interest rate cuts at their upcoming policy meeting.
The Consumer Price Index (CPI) rose 0.6% in August, while CPI inflation increased to 3.7% on a year-over-year basis, driven by surging oil prices, but core inflation fell to its lowest level since mid-2021, possibly indicating comfort for the U.S. Federal Reserve.
Inflation is expected to fall below the Federal Reserve's 2% target by late next year, despite a recent rise in consumer prices driven by increased energy costs.
Australia's labor market may have peaked as the unemployment rate hovers around historic lows, leaving little room for improvement and potentially opening the door for further job losses, which could negatively impact the Australian Dollar (AUD) that has already been weakening due to slowing Chinese demand. Economists expect an increase in jobs for August, but there is potential for a downside surprise and a second consecutive month of declines.
Inflation in the Phoenix area has cooled down to 3.7% over the past 12 months, no longer ranking as one of the highest inflationary hotspots in the US, as the housing market has slowed down and the Federal Reserve's interest-rate increases have taken effect.
The top 10 African countries with the highest drop in inflation rates in one month are Zimbabwe, Ghana, Kenya, Senegal, Mozambique, Togo, Mauritania, Uganda, Seychelles, and South Sudan.
Consumers' inflation expectations have reached the lowest level since March 2021, with expectations of a 3.1% rise in prices over the next year, according to new data from the University of Michigan, signaling a positive sentiment for the Federal Reserve's fight against inflation.
New research suggests that elevated interest rates may not have been the main cause of the decline in inflation, sparking a debate about whether the Federal Reserve needs to raise rates again.
UK inflation unexpectedly fell in August to 6.7%, easing pressure on the Bank of England to raise interest rates, with falling prices for hotels and air fares offsetting the rising cost of fuel.
Inflation in Britain slowed for a third consecutive month in August, defying expectations of a rise due to higher fuel prices, with consumer prices rising 6.7 percent compared to the previous year, driven by slower increases in food prices and a decline in hotel room costs. Core inflation also fell more than anticipated, indicating a potential easing of inflationary pressures, though price growth remains uncomfortably high. The Bank of England is set to announce its decision on interest rates, with growing speculation that rates may be held steady due to signs of slowing inflation and a weak economy.
