Busier week for data and where better to start here in the UK, where, at the time of writing, the summer appears to have finally arrived. How long it will last is anyone’s guess. Key out this week was the latest inflation data. This showed that consumer price inflation to June was 2% year on year, the same as the previous month and still in line with the target level set. Some had forecast that it could fall to 1.9%. The price action of the underlying components of the inflation basket was mixed.

Core inflation, which excludes the more volatile items of food and energy, remaining steady at 3.5%, perhaps a little too high for comfort still for the Bank of England. We continued to see a discrepancy between service and goods inflation here, with the former posting a year on year rise of 5.7% whilst the latter saw a rate of -1.4%. I guess the UK public is enjoying experiences again rather than enjoying goods, which was all they could do way back in COVID times.

Also proving a little sticky for the Bank of England is the jobs market. Whilst wage inflation has ticked down from previous levels, average earnings excluding bonuses still grew at 5.7% to May, which was in line with forecasts. This means that the UK public as a whole continues to enjoy real wage growth, which is perhaps contributing to that sticky core inflation which we continue to see. Ultimately, whilst this could mean that core inflation remains sticky, this could prove a positive for the UK economy.

Stronger economic growth for the UK was something reflected on in the latest economic projections produced by the International Monetary Fund (IMF). Within we saw the growth rate for the UK uplifted from the previous forecast of 0.5% to 0.7% for 2024. Whilst not a great number in absolute terms it is a direction in the right way, nonetheless. This was reflected for a time in the sterling exchange rate which knocked on the door of $1.30.

We saw little change to expectations for World growth, at 3.2% which was the same as that predicted in April. It remains emerging and developed market economies which should maintain the highest rate of growth at 4.3%, a 0.1% pick up from the previous forecast. The rate of growth in developed markets meanwhile was unchanged at 1.7%. A pickup in UK economic growth was negated by a reduction in expectations for the US and Japan, although the former is still expected to expand at 2.6% this year, before a more marked slowdown in 2025.

The 19th has undoubtedly been taken over by the outage seen in information technology globally. Could we yet see another outage in terms of President Biden stepping down from his current campaign for another term? What ramifications would this have for the election result and potential changes to economic policy that follow?

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