### 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.
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.
Global prices for staple foodstuffs have reached a two-year low in August, driven by declines in dairy products, vegetable oils, meat, and cereals, while sugar and rice prices have increased due to export restrictions and extreme weather conditions.
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.
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.
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 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%.
Canada's annual inflation rate falls to 3.8% in September, grocery prices rise more slowly.
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.
U.S. existing home sales dropped 2% in September due to high mortgage rates and a shortage in housing supply, with prices falling slightly and the supply crunch being driven by the surge in mortgage rates over the past year.
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.
