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BOV Market Watch - Week ending 11th June 2021
11 Jun 2021
US consumer prices climbed more than expected in May. A highly anticipated report released by the US Labour Department on Thursday showed that consumer prices increased by more than expected in May, as pent-up demand combined with higher prices for goods to stoke concerns about inflationary pressures. The Labour Department said that its consumer price index, or CPI, rose by 0.6 percent in May after climbing by 0.8 percent in April. Economists had expected consumer prices to increase by 0.4 percent. Core consumer prices, that exclude food and energy prices, climbed by 0.7 percent in May following a 0.9 percent advance in April. Core prices were also expected to rise by 0.4 percent. Compared to the same month last year, consumer prices in May were up by five percent the report showed, reflecting the biggest spike since August of 2008. The annual rate of core consumer price growth also accelerated to 3.8 percent in May, which represents the biggest jump since June of 1992.

UK retail sales saw highest rise since start of pandemic. 
UK retail sales increased by the most since the Covid-19 pandemic began, driven by the relaxation of restrictions, data from the British Retail Consortium, or BRC, showed on Tuesday. Total sales grew by ten percent compared with the same month in 2019 before Covid-19 hit consumer spending and tipped the UK into recession. Pent-up demand among consumers has meant a high street spree, with furniture and household goods sales leading the way. Following the reopening of physical shops, online sales growth fell back to 39 percent in May compared with a three-month average of 64 percent. However, it remainssignificantly higher than pre-pandemic growth of 1.5 percent in May 2019.

Supply bottlenecks throttle German industrial output in April.
Germany's industrial production logged an unexpected decline in April, likely caused by supply bottlenecks due to a lack of semiconductors, timber and other intermediate goods. The Federal Statistics Office said that industrial output dropped by one percent month-on-month in April, after a downwardly revised increase of 2.2 percent in March. Economists had forecast a 0.4 percent rise. From a year earlier, April’s industrial output increased by 26.4 percent in calendar-adjusted terms, according to Destatis. The weaker than expected industrial production figures suggest that the German economy will have to rely on household spending to support a still-fragile recovery from the coronavirus crisis. 

China inflation rises in May.
Rising costs of imported commodities resulted in a surge in China’s factory-gate inflation to its highest level since 2008. The producer price index climbed nine percent in May from a year earlier, driven by price increases in the prices of oil, metals and chemical, the National Bureau of Statistics said on Wednesday. Economists had forecasted an 8.5 percent increase. On the other hand, consumer prices climbed 1.3 percent on a yearly basis in May versus a 0.9 percent rise in April, data from the National Bureau of Statistics revealed on Wednesday. But this was weaker than the economists' forecast of 1.6 percent, possibly due to intense competition among Chinese manufacturers. Consumer price inflation is likely to rise a bit further as a tighter labour market and easing virus disruptions lift services inflation, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).