UK headline inflation eases but core pressures remain

Obtain free World Economic system updates

We’ll ship you a myFT Day by day Digest electronic mail rounding up the newest World Economic system information each morning.

At present’s prime tales

• Russian president Vladimir Putin is to debate ramping up currency controls with authorities after a unprecedented 3.5 share level fee rise did not halt the rouble’s slide.

• A container ship left Odesa port for Istanbul, the primary vessel to depart from Ukraine’s ports since Russia threatened to assault civilian transport within the Black Sea final month. Wheat costs rose over the heightened danger to Ukrainian exports.

• The US is pushing Iran to stop selling armed drones to Russia as a part of discussions on a broader understanding between Washington and Tehran to de-escalate tensions and comprise a long-running nuclear disaster.

For up-to-the-minute information updates, go to our live blog

Good night.

Ministers welcomed at this time’s knowledge exhibiting UK inflation falling more than expected in July however an unchanged “core” determine retains the stress on the Financial institution of England to proceed with its programme of rate of interest rises.

Headline CPI fell from 7.9 per cent to six.8 per cent, the bottom fee of enhance since February final yr, pushed by decrease gasoline and electrical energy prices.

Nonetheless, as soon as unstable meals and power costs are stripped out, core inflation is unchanged at 6.9 per cent, whereas the annual fee for companies, which officers see as the very best indicator of underlying home inflation, truly elevated, from 7.2 per cent to 7.4 per cent.

Inflation considerations had been additionally fuelled by labour market knowledge yesterday that confirmed record wage growth of 8.2 per cent within the three months to June. This was additional highlighted by a survey on Monday exhibiting that employers had been more and more resorting to bidding wars to retain employees.

On the constructive facet, it did imply that annual progress in common pay exceeded worth will increase for the primary time since March 2022, marking the tip of Britain’s “painful pay squeeze”.

Earnings are actually lastly increased than earlier than the 2008-09 international monetary disaster, however on the expense of what Nye Cominetti, economist on the Decision Basis think-tank, described as a “15-year stagnation [that] has value common staff £230 every week — and left Britain a far poorer nation”.

Different value of dwelling pressures stay. House rental costs in July rose at their fastest rate ever, in keeping with new knowledge, whereas mortgage charges are anticipated to remain excessive for a while.

At present’s knowledge did present a welcome stabilisation of meals costs in July, rising simply 0.1 per cent within the month, bringing the annual fee down from 17.3 per cent to 14.9 per cent. Separate survey knowledge yesterday confirmed grocery price inflation falling sharply within the 4 weeks to August 6 to hit 12.7 per cent, the second-largest month-to-month drop since analysis firm Kantar started monitoring in 2008.

A captivating FT Huge Learn particulars the changes in UK consumer behaviour for the reason that monetary disaster, when recession was adopted by an extended interval of very low rates of interest and weak wage progress. The center courses turned extra seemingly to purchase from worth retailers akin to Primark, Aldi and Lidl whereas the rise of the smartphone boosted on-line procuring and bargain-hunting.

The period was additionally outlined by a transfer from shopping for issues to doing issues (at the very least till the pandemic struck) or as one government at Swedish furnishings retailer Ikea put it, the world “hit peak stuff”.

See how your nation compares on rising costs with our global inflation tracker

Must know: UK and Europe financial system

The top of Norway’s $1.4tn oil fund informed the FT he was anxious that political resistance to environmental insurance policies was spreading from the US to the UK. “You may have a giant nation in Europe that’s slowing down the work on local weather at a time the place it’s extra essential than ever,” he mentioned. Inexperienced power plans are additionally being jeopardised by locals’ objections to new power infrastructure.

Italy’s deputy prime minister Antonio Tajani joined within the criticism of the federal government’s controversial bank windfall tax, arguing it mustn’t apply to smaller lenders. Italy has additionally proposed worth caps on flights between the mainland and the islands of Sicily and Sardinia: airways have called for Brussels to step in.

Must know: World financial system

China unexpectedly reduce a benchmark rate of interest by the largest margin for the reason that begin of the pandemic as policymakers tried to deal with the nation’s faltering restoration. They’ve additionally give you a novel resolution to the issue of youth unemployment: stop reporting the figures.

China is changing into more trouble than it’s worth for US investment banks, says Asia monetary correspondent Kaye Wiggins. Beijing put the brakes on offshore listings in a 2021 crackdown, then introduced new guidelines in February that gave mainland regulators much more affect than earlier than. 

Argentina is struggling to avoid economic collapse after the shock victory of radical rightwinger Javier Milei in a major ballot forward of the nation’s presidential election. The black-market greenback, a staple of Argentine life, has jumped to nearly double the brand new official alternate fee. Whoever turns into president faces a daunting challenge, says the FT editorial board.

Gabon closed the primary debt-for-nature swap in continental Africa, highlighting how creating international locations are turning to offers that funnel cash to conservation and ease their debt burdens. The deal lowers the rate of interest on its debt and extends cost deadlines in return for enhancing a nature reserve and strengthening fishing rules.

Lord Jim O’Neill, creator of the Brics acronym, mentioned the concept the group of rising nations (Brazil, Russia, India, China and South Africa) may develop a typical foreign money was a “ridiculous” idea. The FT editorial board mentioned India wanted reform to capitalise on the country’s economic potential.

Must know: Enterprise

Intel’s try to purchase Israeli chipmaker Tower Semiconductor turned the newest sufferer of geopolitical tensions after failing to secure regulatory approval in China for the $5.4bn deal. A deal on that scale wants the go-ahead from regulators world wide, together with from Beijing.

Carlsberg mentioned it was “shocked” on the Russian seizure of its Baltika Breweries subsidiary final month. The corporate raised its 2023 profit forecast after robust first-half gross sales, bucking the broader development within the beer business.

Vietnamese electrical car start-up VinFast is worth more than Ford or GM after shares of the lossmaking firm soared on its US inventory market debut. Billions extra of funding in US charging infrastructure is required for electric vehicles to be more widely adopted.

Chinese language pharma firms are creating copycat variations of “miracle” western weight-loss drugs. China has the world’s largest obese and diabetic inhabitants. Right here’s our deep dive on the “skinny jabs”.

UK retail bellwether Marks and Spencer lifted its annual forecast after reporting higher sales in its clothing and food businesses. The announcement follows latest upbeat statements from different UK retailers together with Primark and Subsequent.

Issues concerning the Chinese language financial system and the truth that US rates of interest may need to remain increased for longer to curb inflation have turned investors gloomier on the outlook for European inventory markets.

The World of Work

Former Goldman Sachs managing director Maeve DuVally informed the FT that corporate America needed to “step up” for transgender staff. DuVally’s popping out in 2019 was seen as a watershed second for Wall Avenue.

The talk over the “proper to disconnect” has created a number of noise however how is it being mirrored in actual life? Columnist Sarah O’Connor says the development has had much less affect than proponents hoped or critics feared, providing a useful lesson within the perils of performative policymaking.

When good intentions aren’t sufficient: the Working It podcast discusses why diversity strategies fail — and how to fix them.

Podcast host Isabel Berwick can be your go-to for Workplace Remedy. The most recent drawback: must you handle your group the way in which your boss expects you too or stick to what you believe is the right way? You may join Isabel’s Working It e-newsletter here.

Some excellent news

Scientists have proven that machine studying can precisely predict various kinds of Parkinson’s illness using images from patients’ stem cells, elevating hopes that personalised medicine could quickly turn out to be a actuality.