Will UK inflation hit its highest level in a decade?
UK inflation is expected to hit its highest level in a decade in October as supply chain disruptions, soaring energy prices and a tight labor market drive up the cost of consumer goods.
According to a Refinitiv poll of economists, consumer price growth will hit an annual rate of 3.9 percent in October, up from 3.1 percent in September. George Buckley, an economist at Nomura, said ahead of a report by the Bureau of National Statistics on Wednesday that he expects inflation to climb further to 4.5 percent in November and hit a high of 5 percent by the spring of next year, in line with expectations the Bank of England.
After the spring, the BoE expects inflation to decline as the effects of higher oil and gas prices wear off, demand for goods fades, and some commodity shortages subside.
BoE Governor Andrew Bailey said, however, that the “crucial” element in assessing the extent to which inflation would be transitory, and therefore the magnitude and pace of the bank’s response, will be the development of the labor market after the end of the vacation program in September. Valentina Romei
Will US retail sales accelerate into the holiday season?
U.S. retail sales are expected to grow faster in October than the previous month as the industry prepares for what is likely to be a strong holiday season while addressing supply chain bottlenecks and labor shortages.
Many Americans do their Christmas shopping earlier this year in hopes of avoiding sell-off warnings before the holidays. Coupled with robust demand for Halloween items, the early Christmas rush likely gave fall sales a boost.
According to a refinitive poll of economists ahead of the monthly numbers released on Tuesday, sales are well on the way to up 1.4 percent from the previous month, up from the 0.7 percent increase in September.
Retailers are scrambling to meet rising demand as port congestion and a shortage of truck drivers have created delays in the supply chain, increasing the chances that gifts will be hard to find.
Mahir Rasheed, US economist at Oxford Economics, said that tighter inventory – especially clothing and accessories – is “the greatest risk to vacation spending as consumers may find fewer items and shift consumption to services or withhold spending until theirs.” preferred items are available ”. in stock.”
Still, the National Retail Federation predicts sales will hit a new record high during the holiday season. The retail group expects an increase of 8.5 to 10.5 percent compared to the previous year, after sales rose by 8.2 percent in 2020.
This would suggest that spending will remain resilient to a sharp rise in consumer prices, thanks in part to strong savings and an increase in household wealth from property values. Matthew Rocco
Will the Turkish central bank risk another rate cut?
The background to the next meeting of Turkey’s Monetary Policy Committee is not promising. The annual inflation rate is around 20 percent. The lira, which has already fallen 25 percent this year, is close to the symbolic threshold of 10 per dollar. Global fears of inflation have led other developed and emerging economies to either hike interest rates – or signal that rate hikes are on the way.
However, analysts mostly assume that the Turkish central bank will cut interest rates on Thursday for the third month in a row. According to a Bloomberg poll of economists, the bank, which has been under heavy pressure from President Recep Tayyip Erdogan, a vehement opponent of high interest rates, will cut its key interest rate by 1 percentage point to 15 percent. Such a move risks putting further pressure on the lira and accelerating inflation in a country that is heavily dependent on imported energy and goods.
Per Hammarlund, chief emerging market strategist at Swedish bank SEB, says it would make sense to pause the easing cycle and let inflation fall before it resumes. But he expects the bank to cut anyway. In this scenario he said: “There is only one way for the” [lira] go and that’s lower. “He added,” The only question is how quickly it gets weaker. “
One dissenting voice was HSBC, suggesting the central bank might opt to pause its rate-cutting cycle temporarily given the lira’s sharp depreciation last week. She added, however, that she remains convinced that the central bank is “tolerant of further lira weakness” and will continue to cut rates in December and beyond. Laura Pitel
