“Consumer prices in the US…”

Source: Reuters

Consumer prices in the US increased by the most in 16 ½ years in March amid Russia’s war against Ukraine that boosted the cost of gasoline to record high.  The consumer price index edged higher by 1.2% last month, the biggest monthly gain since September, 2005, said the Labour Department on Tuesday.  The CPI advanced 0.8% in February.  Besides pushing up gasoline prices, the war in Russia and Ukraine has led to a global hike in food prices as Russia and Ukraine are major exporters of commodities like wheat and sunflower oil.  In the 12 months through March, the CPI accelerated 8.5% representing the largest year-on-year gain since December 1981, after a hike in February of 7.9%. The FED raised its policy interest rate by 25 basis points, the first hike in more than three years.  Meanwhile the Minutes published last week appeared to set the stage for more increases.    

Labour Market in the UK

The unemployment rate dropped 3.8% in the UK in the first three months to February matching the level in the last quarter of 2019 before the COVID-19 pandemic.  However, there were some indications of lower demand for staff on fears of inflation slowing the economy this year and wages drop to keep up with prices.  Despite the number of vacancies hit a record high in the first three months of the year at 1.288 million, the increase of 50,000 from February was the lowest rise in nearly a year.  Meanwhile, in the three months to February earnings excluding bonuses rose by 4% compared with the same period a year earlier. 

UK  – Retail Sales

British retailers reported weaker annual sales growth last month amid growing pressure on consumer spending and seasonal factors.  The British Retail Consortium (BRC) said that total retail spending amongst its members mainly large supermarkets and chains was 3.1% higher than the previous year compared with 6.7% annual growth in February.  According to BRC estimated total prices among its members rose by 2.1% in the year to March, 2022 the biggest increase in 11 years.  Meanwhile, the broader official measures of consumer price inflation — which includes a wider range of goods and services than the BRC measure – hit a 30-year high of 6.2% in February.

UK – Inflation

Inflation in the UK rose to 7% in March, its highest since March 1992 and higher by 6.2% in February, showed official figures on Wednesday.   In line with other major economies British inflation has seen an unprecedented surge over the past year as the increase in energy prices surged and pandemic supply chain difficulties persisted.  Concurrently, Russia’s invasion of Ukraine on 24 February has pushed energy prices even higher and last month the Britain’s Office for Budget Responsibility forecasted that the CPI would peak at a 40-year high of 8.7% in the final quarter of 2022.  Accelerated inflation and higher payroll taxes is highly impacting Britain’s household income since records began in the late 1950s. Forecasts of economic growth will sharply slow over the course of the year.  Meanwhile, Wednesday’s data showed that core CPI that excludes food, energy, alcohol and tobacco prices climbed to 5.7% in March from 5.2% in February.  Retail price inflation which is an older measure which the ONS states is inaccurate, but which is widely used in commercial contracts and to set interest payments on inflation-linked government bonds climbed to 9%, its highest since 1991.  There were indications of further strains ahead as manufacturers increased their prices by 11.9% over the 12 months to March, the biggest jump since September, 2008.  The cost of raw materials for manufacturers increased by 19.2% the highest increase in records since 1997. 

Eurozone Banks to tighten Credit Access

An ECB survey showed on Tuesday that eurozone banks plan to sharply tighten access to corporate credit in the second quarter as the war weighs on the outlook and impacts on their risk tolerance.  The survey is usually a key input in the bank’s policy considerations. Policymakers have become increasingly concerned that banks will cut down lending as they become more reluctant to finance investment during an uncertain period.  According to the ECB, banks’ due diligence has become tighter during the first quarter on increased risk from higher inflation and supply chain disruptions. However, the situation is likely to get worse on the back of the Russia’s war in Ukraine and the concern about higher input prices. Demand for credit continued to increase in the first quarter and the ECB is expecting a net increase in corporate loan demand in the second quarter. 

Oil

On Monday, OPEC told the European union that current and future sanctions on Russia could create one of the worst ever supply shocks and it would be impossible to replace the volumes and indicated it would not pump more. EU officials held talks in Vienna with representatives of OPEC in view of the potential sanctions on Russian oil.  The European Union has repeated its plea for oil-producing countries to look at whether they can increase output to help cool the increase in oil prices, reported a European Commission official to Reuters.  Meanwhile, oil prices dropped about 4% with Brent crude dropping below $100 a barrel on worries that the COVID-19 pandemic will drop demand in China and the International Energy Agency (IEA) countries plan to release record volumes of oil from strategic stocks.  US West Texas Intermediate closed at its lowest since 25 February, the day after Russian forces invaded Ukraine, an action Moscow calls a “special military operation”.  Brent futures dropped 4.2% to settle at $98.48 a barrel while WTI crude dropped at 4% to settle at $94.29.  Oil prices jumped on Wednesday as a large increase in US inventories did not make up for the worries about tight global supply.  Brent crude settled higher by 4% to $108.78 while US West Texas Intermediate (WTI) crude futures also rose by 3.7% to reach $104.25.  Meanwhile, the White House is releasing 180 million barrels from U.S. reserves over six months, part of a release of 240 million barrels from members of the International Energy Agency (IEA). 

China’s Imports

China’s imports unexpectedly dropped in March amid COVID-19 curbs across large parts of the country that hampered freight arrivals and weakened demand, while export growth slowed slightly.  Customs data showed on Wednesday that inbound shipments dropped 0.1% from a year earlier in March marking the first drop since August, 2020.  Meanwhile, the strong trade performance of China is expected to relent this year amid higher energy prices and global logistics disruptions that are caused by Russia’s war in Ukraine that could impact exporters.  Whilst in January-February, China reported a $115.95 billion in surplus, in March the country reported a trade surplus of $47.38 billion, more than twice the forecast of $22.4 billion arising from an unexpected decline in imports. 

Malta:  Residential Property Transactions – First Quarter 2022

A press release dated 11 April, 2022 reveals the provisional data on residential property sale transactions based on the date of registration with the tax authority.  In March, 2022 the number of final deeds of sale related to residential property amounted to 1,165, a 9.3% decrease in comparison to a year earlier.  The value of these deeds amounted to EUR 249.3 million which is 7.8% lower than the corresponding value of that recorded in March, 2021.  Meanwhile, in the first quarter of 2022, 3,373 final deeds of sale were registered representing an annual increase of 2.9%.  The value of the deeds registered during this period rose by 8.9% over the same quarter of the previous year and amounted to EUR 736.1 million.  The highest numbers of the final deeds of sale were recorded in the two regions of Ghawdex and Haz-Zabbar, Ix-Xghajra, iz-Zejtun, Birzebbua, Marsaskala and Marsaxlokk at 582 and 397 respectively.  Meanwhile, the lowest number of deeds were noted in the region of Il-Birgu, L-Isla, Bormla and Il-Kalkara and the region of L-imdina, Had-Dingli, Ir-Rabat, L-Imtarfsa and L-Imgarr.  The highest annual increase was registered in the Ħ’Attard, Ħal Balzan, L-Iklin and Ħal Lija region, at 51.6 per cent. Conversely, the largest annual decreases were in the two regions of Il-Birgu, L-isla, Bormla and Il-Kalkara, and Il-Mellieħa and San Pawl il-Baħar, with declines of 28.8 per cent and 18.1 per cent respectively.

Malta:  Registered Employment – November 2021

A press release dated 13 April 2022 shows that administrative data provided by Jobsplus shows that over a period of one year, the labour supply in November, 2021 increased by 3.1%, reaching 244,512. Comparing November 2021 to November 2020, the highest increase in employment was brought about by the construction sector, accommodation, food services activities.  Meanwhile, registered full-time employment in the private sector increased by 8,149 persons to 191,618 while public sector full-time employment increased by 1,016 persons to 51,718.

Antonella Mercieca

Client Relationship Manager

Source:

Reuters, https://nso.gov.mt

Date:

April 14th, 2022


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