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BOV Market Watch - Week ending 13th May 2022
13 May 2022
US inflation stays elevated in April, defying expectations of a bigger drop. A decline in gasoline prices was responsible for a slight decline in overall US inflation during April, though persistent supply-side disruptions still kept inflation near its highest level in 40 years. The closely watched Consumer Price Index (CPI) report, published on Wednesday, showed the annual rate of inflation slowing for the first time since August. The headline annual rate came in at 8.3 percent, down from 8.5 percent in March, but more than the 8.1 percent economists expected. The so-called core inflation rate, that excludes food and energy prices, slowed to 6.2 percent in April from 6.5 percent in March, although this was expected to decelerate to six percent. On a month-over-month basis, the broadest measure of CPI increased by 0.3 percent, compared to March's 1.2 percent surge but defied expectations of a 0.2 percent print. Broadly, the report offered little evidence that US inflation is cooling.

Germany's inflation highest in more than four decades in April. Inflation in Germany, Europe’s largest economy, hit a new multi-decade high in April, pushed higher by food and energy prices, according to figures published by the Federal Statistical Office (Destatis) on Wednesday. Consumer prices are now 7.4 percent higher than in the same month last year, Destatis said. The April rate was higher than the 7.3 percent reported in March. The last time prices rose at a faster pace was for West Germany in the second half of 1981 - nine years before the German reunification - as the Iran-Iraq War caused oil prices to soar.

Recession fears in the UK grow as rising prices hit spending. The UK economy unexpectedly shrank in March as households cut back spending and the cost of living rose to levels last seen in the 1950s. The economy grew by 0.8 percent during the first three months of the year but shrank by 0.1 percent in March. The quarter’s growth is slower than the 1.3 percent increase in output seen in the fourth quarter of last year and economists' forecast of one percent growth in output. The latest economic growth figures cast doubt on the Bank of England’s ability to keep hiking interest rates and pile pressure on the government to respond with measures to support growth, although the focus seems to be on controlling inflation.

India’s industrial production misses estimates as inflation closes in on eight-year high. India's industrial output, as measured by the Index of Industrial Production (IIP), grew by 1.9 percent in March, missing average forecasts of 2.04 percent and far lower than the 2021-22 average of 11.3 percent. IIP was however up from the 1.5 percent reported in both January and February amid the third wave of the Covid pandemic. Meanwhile, earlier in the week, data from the National Statistical Office showed that retail inflation in the subcontinent reached a near eight-year high of 7.79 percent in April, persisting above the Reserve Bank of India’s inflation target for the fourth consecutive month.

Australia’s housing approval permits sink in March. Australia’s new housing pipeline has continued to waver with the number of building approvals tumbling in March after February’s 40 percent spike. Permits for private sector houses shed three percent on month and 32.2 percent on year to 9,932, while permits issued for dwellings excluding houses tumbled 29.9 percent on month and 41.0 on year to 5,004.units. Australian Bureau of Statistics director of construction statistics Daniel Rossi said the fall in homes approved in March had been driven by private sector homes, excluding houses, which fell by 30 percent.
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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).