### Summary
Former Toys "R" Us CEO Gerald Storch warned that the economy is likely to face a difficult holiday season due to persistent inflation. Other economic stresses such as rising interest rates, credit card debt, and student loans are also contributing to consumer difficulties.
### Facts
- Inflation remains sticky despite the Inflation Reduction Act that was passed a year ago.
- Sales of physical products have been declining for 11 consecutive months when adjusted for inflation.
- The July consumer price index (CPI) rose 0.2%, with prices climbing 3.2% from the same time last year.
- Pulte Capital CEO Bill Pulte suggests that the economy is in a period of stagflation with low growth and high inflation.
- Shelter costs, accounting for 40% of the core inflation increase, rose 0.4% for the month and are up 7.7% over the past year.
- Americans are spending $709 more per month on everyday goods and services compared to two years ago.
- Consumers are shifting towards value retailers in response to inflation.
- President Biden acknowledges that the Inflation Reduction Act was not solely aimed at reducing inflation but rather focused on generating economic growth.
### Summary
The UK is experiencing mixed economic news, with wage increases, falling inflation, and lower food prices, but core inflation remains high. The Bank of England is expected to raise interest rates in September. Meanwhile, the government is providing support payments to eligible households, and usual state benefits will be paid in September. The Energy Price Guarantee has expired, and consumers will now pay the Energy Price Cap rate, which has decreased but is still higher than pre-pandemic levels.
### Facts
- 💰 The UK saw wage increases, falling inflation (excluding volatile food and energy prices), and lower food prices in mid-August.
- 💸 Core inflation remains high at 6.9%, indicating that any economic gains may be offset by higher borrowing costs.
- 🏦 The Bank of England is likely to raise interest rates from 5.25% to 5.5% in September to address high inflation.
- 💷 The government is providing support payments to eligible households, including means-tested benefits claimants, people with disabilities, and pensioners.
- 💳 Usual state benefits and pension payments will be delivered as normal in September with no bank holidays.
- 💡 The Energy Price Guarantee has expired, and consumers will now pay the Energy Price Cap rate, which has decreased to £2,074 for Q3 2023.
- ⬇️ Wholesale energy prices have dropped, leading consultancy firm Cornwall Insight to predict further decreases in October. However, prices are expected to remain above pre-pandemic levels for the foreseeable future due to geopolitical incidents and the UK's reliance on energy imports.
Prices in British shops have risen at their slowest rate since October, with a 6.9% increase in the year to August, due to rising costs of meat, potatoes, and cooking oil, as well as a reduction in grain exports from Ukraine and export restrictions on rice from India, according to the British Retail Consortium.
German inflation fell slightly in August, but economists predict that the downward trend will continue in the coming months, with food prices showing above-average growth.
British factories in August experienced their weakest month since the start of the COVID-19 crisis due to shrinking orders caused by rising interest rates, according to a survey, resulting in a decline in purchasing activity, inventory holdings, and staffing levels. However, the slowdown in domestic and export demand has alleviated inflation pressures, potentially leading to a decrease in goods price inflation. With the economy showing signs of a slowdown, the Bank of England is expected to raise rates for the 15th consecutive time, despite concerns that it may lead to 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.
Large numbers of job cuts and reduced investment are hitting British manufacturing due to a slump in demand, according to the deputy editor of The Telegraph, Tim Wallace. The purchasing managers’ index fell to 43 in August, down from 45.3 in July, the lowest reading since August 2014 and the worst performance since May 2020, shortly after the first Covid-19 lockdown, also the worst since the financial crisis. Wallace cites Make UK economist Fhaheen Khan’s view that interest rates and inflation have lowered sales, sparking job cuts.
Retail sales in the UK increased by 4.1% in August, with non-food items experiencing the strongest growth due to higher spending on health and beauty, although clothing and footwear sales were weaker; however, the increase in sales was partly driven by rising prices, indicating that consumers are buying fewer items but spending more.
Global food commodity prices declined by 2.1 percent in August, driven by falling prices of essential food items excluding rice and sugar, according to the Food and Agriculture Organization of the UN. The decrease was due to reduced prices for vegetable oils, meat, dairy products, and cereals, while sugar prices saw a slight increase.
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.
Despite claims by the Biden administration and corporate media that inflation is decreasing, the latest consumer price index from the Bureau of Labor Statistics shows that Americans paid 3.7 percent more for basic consumer items in August compared to the previous year.
Grocery bill prices remained stable in August, with a 0.2% increase in consumer prices at supermarkets, according to the Bureau of Labor Statistics, but food prices at home rose by 3.0% compared to last year.
Consumer sentiment in the US fell for the second month in a row in September, reflecting concerns about the economy, even though Americans believe that inflation will continue to slow.
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.
Higher grocery prices on P.E.I. due to inflation can be mitigated by careful shopping, with beef prices seeing significant increases while produce prices have remained relatively stable.
Consumer confidence in the U.S. dropped to its lowest level in four months in September, due to rising gas prices, high interest rates, and economic uncertainty.
The overall inflation rate in most European countries dropped to its lowest level since before the start of the war in Ukraine, despite climbing oil prices, with consumer prices in the eurozone rising at an annual rate of 4.3 percent in September, down from 5.2 percent in August, according to the European Commission's statistical arm.
Consumer spending in the US increased by 0.4% in August, while core inflation fell below 4.0% for the first time in over two years, potentially reducing the likelihood of an interest rate hike by the Federal Reserve.
Food prices in the UK dropped in September for the first time in almost two years, providing some relief to consumers amid the cost of living crisis, as a result of price reductions for dairy, margarine, fish, and vegetables and fierce competition among supermarkets, although overall food prices are still higher than a year ago.
Tesco, the UK's largest supermarket chain, is aiming to lower prices and ease the pressure on households grappling with rising food prices, as the company reports a significant increase in profits for the first half of the year due to lower food costs and increased sales of own-brand products. The pace of rising food prices is expected to slow further, and Tesco is committed to driving down food bills for customers.
Despite concerns about rising prices, recent food inflation figures show a reduction in costs for most food categories, signaling a positive trend and the lowest food inflation rate since February 2022 in Canada; however, there is still anxiety about food affordability and a perception that the worst is yet to come.
India's retail inflation is expected to drop below 6% in September due to cooling prices for essential commodities, although food inflation stood at around 10% in August.
UK grocery price inflation has reached its lowest rate in over a year, with the price of butter dropping by 16p compared to last year, according to Kantar, although prices for items such as eggs, sugar confectionery, and frozen potato products are still on the rise.
U.S. producer prices rose more than expected in September due to higher costs for energy products and food, however, underlying inflation pressures at the factory gate continued to decrease.
The U.S. government's upcoming inflation report is expected to show a cooling off of inflation, with overall prices for consumers rising by 0.2% compared to August and 3.6% compared to a year ago, and core inflation expected to be up 4.1% from September last year, indicating slower price increases in September than in August.
The Consumer Price Index rose 3.7% for the 12 months ended in September, with high gas prices and shelter costs contributing to inflation, although food prices matched overall inflation for the first time since early 2022, and underlying inflation trends are moving in the desired direction of the Federal Reserve.
Consumer prices in the US rose by 0.4% in September, slightly surpassing expectations, with the consumer price index (CPI) rising by 3.7% compared to the previous year, higher than the estimated 3.6%.
Headline inflation is expected to have eased in September, while pay growth is slowing, with economists predicting that annual inflation fell slightly to 6.5% from 6.7% in August, although it still remains well above the Bank of England's 2% target, and the jobs market weakening and reducing the need for employers to increase wages.
Canada's annual inflation rate falls to 3.8% in September, grocery prices rise more slowly.
Canada's inflation rate decelerated to 3.8% in September, lower than economists were expecting, due to lower prices for various goods and services, including travel, durable goods, and some grocery items.
Food prices fell in September for the first time in two years, but fuel prices increased sharply, resulting in an overall inflation rate of 6.7%; however, wages outpaced inflation for the first time in almost two years, alleviating some financial pressure for households.
The inflation rate in Britain remained steady in September, defying expectations of a small decline, due to a rise in fuel prices offsetting a slowdown in food inflation.
UK inflation remains unchanged at 6.7% in September, raising doubts over Rishi Sunak's pledge to halve inflation by the end of the year, as rising fuel prices offset the first monthly fall in food prices in two years.
Retail sales across Great Britain have fallen by more than expected, with volumes dropping by 0.9% in September, suggesting a drop in consumer confidence and a possible recession in the retail sector. Factors such as cost-of-living pressures and warm weather affecting sales of autumn clothing contributed to the decline.
Retail sales in the UK fell more than expected in September due to unseasonably warm weather and cost-of-living pressures, with clothing stores seeing a notable decline in sales of colder weather gear, while food sales increased slightly.
British retail sales fell by 0.9% in September, raising concerns that the retail industry has entered a recession before the crucial festive shopping season, as consumers cut back on spending due to mild weather conditions and rising inflation.
Food inflation continues to rise, with a 5.9% increase in the cost of food in September, highlighting the struggle of rising prices and the need to make hard choices at the grocery store.
