Retail sales, consumer confidence weaken in China: Fitch Ratings

Broad-based declines were also highlighted in headline consumer price index (CPI) inflation rates across many major economies, even though core inflation remains stubbornly high. US CPI headline inflation fell to 3.0 per cent year-on-year (YoY) in June 2023 and 3.2 per cent YoY in July, the lowest levels since March 2021. UK CPI inflation fell by 1.1 percentage points in July to 6.8 per cent YoY, the lowest rate since February 2022, according to the latest edition of Fitch Ratings’ ‘20/20 Vision’ chart pack.

Headline consumer price inflation has also declined notably in recent months in France, Italy, Australia, Canada, Indonesia, and Poland, among others. By contrast the annual CPI inflation rate in Turkiye—after eight consecutive decreases—rose by 9.6 percentage points in July to 47.8 per cent YoY. In Russia, headline CPI inflation rose to 4.3 per cent YoY in July, the third increase in a row and inflation also picked up significantly in India to 7.4 per cent YoY.

Meanwhile, the major central banks have continued to increase interest rates. The fed funds rate (upper limit) was raised to 5.5 per cent in July, while the European Central Bank (ECB) raised its main refinancing operations rate to 4.25 per cent. The Bank of England raised the bank rate to 5.25 per cent in August. Many emerging markets’ central banks have left policy rates unchanged, but with some notable exceptions. Turkiye and Russia have raised interest rates as currencies have weakened and inflation has increased, while Brazil and China have recently cut rates.

ALCHEMPro News Desk (NB)