U.S. CPI Heads Load of Price Data Released Today Around the World

August 10, 2022

Over ten price indices have been reported this Wednesday:

  • German CPI inflation was confirmed at 7.5% in July, down from 7.6% in June and a 48-year high of 7.9% in May. The energy component subside to a still lofty 35.5% 12-month rate of increase, while food accelerated to 14.8% from 12.7% in the previous month.
  • Chinese consumer prices rose 1.3% on month (most in 414 months) and recorded a 34-year high 12-month rate of increase equal to 6.8% in July. Producer price inflation of 73.6% last month was at a 4-month high and not far from March’s record high of 79.9%. CPI and PPI inflation in July 2021 had been 3.0% and 43.4%.
  • Italian CPI inflation dipped 0.1 percentage point below June’s 36-year high of 8.0%. It was only 3.4% in July 2021.
  • Japanese domestic producer price inflation of 8.4% in July was down from 9.4% in June but above 5.6% in July 2021. Import price inflation swelled from 27.3% in July 2021 to 47.6% in June 2022 and 48.0% last month.
  • Portuguese CPI inflation of 9.1% last month was at a 356-month high, up from 8.7% in June and 1.3% in July 2021.
  • Norwegian CPI inflation rose a half percentage point in July to a 34-year high of 6.8%, which compares with 3.0% in July 2021. PPI inflation last month climbed to a 4-month high of 73.6%.
  • Danish CPI inflation of 8.7% last month was at a 470-month high versus 8.2% in June and 1.6% in July 2021.
  • The 17.5% Czech consumer price inflation rate in July was the most in 343 months and up from 3.4% a year earlier.
  • Egyptian consumer prices leaped 1.3% month-on-month in July after a 0.1% dip in June. This lifted the 12-month rate of inflation to a 38-month high of 13.6% versus 5.4% in July 2021.
  • Moldovian CPI inflation of 33.6% last month was the most since at least 2007 and up from 3.5% in July 2021.

Investors expressed immediate relief when the U.S. consumer price report revealed a zero percent month-on-month increase, its first non-positive monthly advance since October 2020. The on-year inflation rate dropped 0.6 percentage points to a four-month low of 8.5%, still up significantly from the July 2021 reading of 5.4%. The main driver of July’s lower inflation was a 4.6% drop in the energy component, which in year-on-year terms receded to 32.9% from 41.6% in June. Food remained problematic with gains of 1.1% compared to June and 10.9% from a year earlier, but service sector prices went up only 0.4% on month, after a string of 0.6-0.7% monthly advances. Core CPI remained steady at 5.9%, down from 6.5% in March but up from 4.3% in July 2021.

U.S. stock futures had been showing only modest net gains but are presently up 1.9% in the DOW, 1.4% in the S&P 500 and 2.5% in the interest-rate sensitive Nasdaq’s case.

The basis point change from yesterday’s closing 10-year U.S. Treasury yield flipped from a rise of 3 bps to a drop now of 7 bps. The post-CPI decline in U.S. long term interest rates pulled down European rates as well. The 10-year JGB yield closed two basis points higher.

The price of Bitcoin is 3.7% above Tuesday’s close, and gold (+0.2%) and WTI oil (-0.2%) have risen since the CPI surprise as well.

In the Pacific Rim, share prices had dropped 2.0% in Hong Kong, 0.9% in South Korea, 0.7% in Japan and 0.5% in China and Australia.

Thailand’s central bank finally climbed on the bandwagon of interest rate normalization. A 25-basis point hike today to 0.75% was the first increase since December 2018 when the policy rate was raised from 1.50% to 1.75%. By a 6-1 vote with one policymaker preferring to kick of tightening with a move of 50 basis points, officials left no doubt that more increases lie ahead. However, their released statement opines that the process  “should be done in a gradual and measured manner.” Officials are satisfied that the growth outlook is secure enough to tolerate a less accommodative stance but also hopeful that CPI inflation, which at 7.6% currently versus 0.5% a year ago and likely to “remain at a high level throughout 2022,” will in 2023 fall gradually “into the target range as the supply-side inflationary pressures subside.”

Several countries released industrial production figures today. In Sweden, output in June was 0.5% below a year earlier. This matched April’s result and followed a 0.3% on-year rise in May and a 16.7% 12-month advance posted in July 2021. Portuguese industrial production fell 2.1% on month, and the 4.6% rise from June 2021 was the smallest year-on-year increase in 16 months. Greece had better results: a 3.2% rise compared to May and an 8.4% increase versus a year earlier. Finnish industrial production grew 8.4% on year, most since December, but in Austria output fell 2.1% on month and posted an on-year 4.6% advance versus 16.1% recorded in the year through June 2021.

Turkish unemployment fell in June to its lowest level (10.3%) since June 2018. And Greek unemployment of 12.1% in June was the lowest in 146 months.

Business confidence in South Africa improved to a 124-month high in July.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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