Inflation jumps in EU-16, UK

In the 16-country eurozone, the jump in inflation in April was confirmed at 1.5% on a year-on-year basis, boosted by fuel and cigarette prices, but core inflation pressures remained weak.

The ZEW Consumer Confidence index dropped 7.2 points to 45.8 in May. Construction output in March rose 7.6%, the most in 14 years, from a 7.2% fall the previous month. In manufacturing, the Purchasing Managers' Index (PMI) fell to 55.9 in May from 57.6 the previous month. The services PMI rose to 56 in April from 55.6 the previous month.

Exports from the euro area rose 22%, while imports were up 20% on a year-on-year basis. The region's unadjusted trade surplus in March was €4.5bn.

In the UK, inflation in April accelerated faster than forecast as consumer prices rose 3.7% from a year earlier, compared with a 3.4% increase in March. Retail sales in April rose for the third month and were above expectations. They rose 0.3% last month, after an upwardly revised 0.5% increase in March.

Imports increased at the fastest rate in the last six months, led by car and engineering equipment imports. The visible trade balanced widened to £7.5bn in March, up from an upwardly revised £6.3bn the previous month. The UK registered a fiscal deficit of £10bn in April.

In the US, inflation unexpectedly dropped in April for the first time in over a year. Excluding food and fuel, the so-called core rate was unchanged, capping the smallest 12-month gain in four decades.

Retail sales in April rose by a seasonally adjusted 0.4% to $366.4 billion, after a 2.1% gain the previous month. This was the seventh straight increase and the 12th gain in the past 13 months. Sales in February and March were revised higher.

Industrial production in April increased 0.8% backed by a strong performance of the core manufacturing sector, which grew by 1%. Utilities' output dropped 1.3%, most likely due to the weather.

This article has been prepared by Bank of Valletta p.l.c., which is licensed to conduct investment services business by the MFSA, for your general information only.