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Inflationary pressures ease in US and China

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Good evening,

New data from the world’s two largest economies today gave some hope that the rise in inflation could slow.

In the US, the consumer price index for July was up 8.5 percent year-on-year, a less than expected increase, falling from 9.1 percent in June, thanks to lower gasoline prices.

The core CPI measurementstripped of volatile food and energy prices and closely watched by the US Federal Reserve, rose 0.3 percent compared to 0.7 percent in June, representing an unchanged annual growth rate of 5.9 percent.

Line chart of annualized percentage change, showing US inflation moderate in July

Today’s data was warmly welcomed by investors, pushing US stock futures and Treasury bonds sharply higher as they bet the Fed would ease its aggressive rate hike plan.

The new numbers also give President Joe Biden an extra boost after the recent approval of his US climate, tax and health care bill.

The Inflation Reduction Act, to give it its proper title, probably won’t make much of a difference in the short term, but in the medium and long term it should cut costs by addressing issues like rising prescription drug prices.

Earlier in the day, China also reported a lower-than-expected increase in consumer and producer prices for July as Covid outbreaks and lockdowns hit demand.

The country’s CPI value reached 2.7 percent due to price increases in pork and fresh vegetables. Though much lower than in other major economies, it was still the country’s highest level in two years. Producer prices rose by 4.2 percent, also slightly less than expected.

Other countries reporting new data today included Germany, the largest economy in the eurozone, where the July CPI was confirmed at 8.5 percent on an EU harmonized basis.

Compare global trends with our inflation tracker

Latest news

For current news updates, visit our live blog.

If you’re looking for some good news, scroll to the end and enjoy our latest section, designed to cheer you up in these trying times.

Need to know: the economy

New predictions showed that the typical British household energy The bill could reach £4,420 next spring – more than three times the level at the start of 2022. Energy editor David Sheppard explains why the situation in Britain is much worse than in mainland Europe. The prime minister’s future rivals, Liz Truss and Rishi Sunak, continue to bicker over how best to help. Can it be worse? What about power outages in winter?

Latest for UK and Europe

The UK summer of discontent continues. Royal Mail has warned of “material” losses if the upcoming union actions continue, as union leaders questioned the prospect of the first-ever RCN nurses’ strike.

Tenants in London face “increasingly unaffordable” rents as private landlords and brokers benefit from a lack of property to allow applicants to make an offer to acquire a new home.

Britons in need of money are also spending less on food deliveries, as evidenced by mounting losses at Deliveroo. General, UK consumer spending held up in July, according to industry data, but the small increase in sales values ​​masked a much larger drop in volumes when inflation is taken into account.

A Europe-wide recession is on the way, but it doesn’t have to be deep or lengthy, writes economics editor Chris Giles. As long as its economies survive the winter, Russia’s energy blackmail will have failed, leaving Moscow the loser, he says. Germany is currently the focal point for pressure from Russian President Vladimir Putin, says Constanze Stelzenmüller of the Brookings Institution.

The dependence on Central Europe Russian oil was highlighted when flows through the Druzhba pipeline were halted over a dispute over payments. The situation was resolved when the Hungarian energy company MOL paid transit fees to Ukraine on behalf of Russia to restart the flows. The payment was blocked by EU sanctions.

The FT editorial has warned that Turkish President Recep Tayyip Erdoğan’s rapprochement with Russia could lead to US retaliation.

Worldwide last

After a difficult 18 months, logistic problems that have haunted the global economy are beginning to decline. For example, the cost of shipping a container around the world has fallen 45 percent from its peak in the fall of last year. Congestion in the ports is improving, as are freight delivery times.

Investors believe Pakistan Sri Lanka could default as it faces rising commodity prices and tighter credit conditions. The country’s debt was among the worst performing emerging economies this year.

Need to know: business

Some American companies are angry at the “significant new tax hikes and unprecedented government price controls” in Biden’s new tax and climate package. On the other hand, Denmark’s Vesta, the world’s largest turbine manufacturer, hailed the new US clean energy subsidies as a breakthrough. However, the package does not meet the new OECD standard for a minimum corporate tax rate of 15 percent: here’s our explanation.

Analysts have warned investors not to get too carried away by the recent rebound Great technology stocks, arguing that earnings cuts could be on the way this year and next.

Located in Hong Kong Lenovo, the world’s largest PC maker, reported the slowest growth in eight quarters, signaling declining consumer demand for electronic goods. Western companies ignore the risk of use Chinese technology in the ‘internet of things’, according to an industry expert. Taiwanese security officials try to force Apple supplier Foxconn to dump his stake in a Chinese chip company.

Robin Hood, the retail trading platform that reached dizzying heights during the pandemic, is suffering a massive “post-Covid hangover” as active users quit. Not just any hangover. As one analyst puts it, it’s “woke up in a hotel in Las Vegas and there’s a Bengal tiger in the bathroom”.

Asia Focused Insurer prudential said Beijing’s zero-covid policy in the first half of the year had contributed to a 31 percent drop in new corporate profits in the Hong Kong division.

U.S IPO fundraising is down 95 percent from this time last year due to falling valuations, economic uncertainty and market turmoil. The situation is reversed in Chinawhere companies rush to raise money before it gets too difficult.

Column chart showing US equity issuance this year has fallen from historic 2021 levels

venture capital fundraising has similar problems. US totals hit an all-time high last year, but the good times are now over, explains West Coast editor Richard Waters in our Behind the money podcasting.

Hotel group IHG raised its dividend, launched a $500 million share buyback and reported profits back above pre-pandemic levels as demand for travel recovered. Hyatt It also reported higher revenues, with the widely used measure of revenue per available room (excluding China) again above pre-pandemic standards.

Cathay Pacific was also confident of an increase in demand, even as it reported a loss of $637 million in the first half. Hong Kong’s flagship carrier operated 11 percent of pre-pandemic passenger capacity and 56 percent of freight traffic in June. tuiEurope’s largest tour operator said the flight disruption in the third quarter had cost 75 million euros, leaving it with a loss of 27 million euros.

One area that doesn’t look like it will recover anytime soon is office property. Shares in IWG, The world’s largest supplier of flexible office space collapsed after analysts warned that fears of a recession would hurt demand.

The world of work

While the “big layoff” is still in full swing, work and career editor Isabel Berwick discusses the dos and don’ts of leaving an employer in the latest issue of our The work podcasting.

The British Legion of self-employed, a major contributor to the country’s post-crash ‘job miracle’, is showing no signs of recovery after numbers plummeted during the pandemic. Whether or not they do will depend on how the cost of living crisis unfolds, says columnist Sarah O’Connor.

Self-employed line chart showing the number of self-employed in the UK has fallen sharply since the pandemic

Covid cases and vaccinations

Total number of worldwide cases: 579.2mn

Total Doses Administered: 12.4 billion euros

Get the latest global photo with our vaccine tracker

What good news . . .

The World nature Fund has happy news to celebrate the Year of the Tiger: Nepal has successfully launched its . doubled population of wild tigers. The WWF says the achievement is a testament to conservation efforts over the past 12 years.

A tiger in Bardia National Park, Nepal
A tiger in Bardia National Park, Nepal © Emmanuel Rondeau/WWF-US

The work — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work and career editor Isabel Berwick. Sign Up here

The climate graph: explained — Understand the week’s key climate data. Sign Up here

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