US Inflation Up, UK GDP Up, Where Now For Interest Rates?

Published / Last Updated on 11/08/2023

The US Labor Department published CPI inflation figures yesterday showing an increase from 3.0% pa in June to 3.2% pa in July with the Labor Department suggesting this was down to increased housing costs due to higher interest rates.  That said, the Labor Dept. suggests that overall, prices are starting to fall.

Meanwhile, today in the UK, the Office for National Statistics (ONS) has published GDP (gross domestic product) i.e., the value of economic output in the UK, showing an inncrease by 0.5% in June.  This increase attributed to better weather (yes, hard to believe that it was only June when we were having our driest month) with as pubs, restaurants, and construction benefitting.  That said, there is still a dampener with NHS and Rail strikes making us all more cautious. 

In China, prices are falling (deflation) which may mean that goods and services production slow down if the Chinese government does not intervene with a stimulus package.  This could go either way for the world, either cheaper exports that will help prices in the UK fall or reducing output keeping prices up.

Comment - It's a waiting game now ...

Either way, we expect the ONS to confirm a UK inflation fall on Monday for July and then we must wait until 21st September for the Bank of England to consider another interest rate increase. By that time, we will have also had another inflation report from the ONS for August on 20th September.

It's all a little wobbly out there as we expect the US, UK, Europe and China all to move into slowdown and recession.

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