Inflation rates remain high
Inflation in the US rose 0.4% in August, higher than the 0.2% increase expected by economists.
Meanwhile, industrial production was up 0.2 % in August after increasing 0.9% the previous month. This was also higher than the unchanged figure which was expected by economists. Factory production, which makes up 75% of total industrial production rose by 0.5%.
On a negative note, retail sales stalled in August as the battle in the US Congress over the debt ceiling, worries about the US economy’s growth prospects, the deteriorating outlook for the euro area’s debt crisis, and the consequent drop in equity markets, hurt consumer confidence.
Core retail sales – which exclude cars, fuel and building materials – were also flat, much weaker than the 0.4% economists had expected.
Meanwhile in the eurozone, the inflation rate held at 2.5% in August, the same rate as in July.
On a positive note, industrial production in the 17-nation common currency area rebounded by 1% in July, the largest increase since November 2010. This was mainly led by an increase in German output.
In the UK, the inflation rate also accelerated in August as consumer prices rose 4.5% from a year earlier, compared with 4.4% the previous month.
This is making it more difficult for policymakers to take decisions as they are stuck between a faltering recovery and inflation that is more than double the Bank of England’s goal.
Meanwhile, a UK labour market reports points to continued weakness with weak earning growth and unemployment on the rise.
The headline unemployment rate in the three months to July was unchanged at 7.9% but the number of unemployed increased by 80,000 while the number of people working part-time increased by 70,000 to 1.28 million, the highest level on record.
This article was compiled by Bank of Valletta plc for general information purposes only.