“President Macron…”

French President Emmanual Macron lost control of the National Assembly in legislative elections on Sunday.  This could put the country into political deadlock unless he negotiates alliances with other parties. While Macron’s “Ensemble” grouping secured the largest number of lawmakers in the 577 seats it fell short of an absolute maturity seeing the left-wing alliance and the far-right perform strongly.  Infact, Macron got 245 seats lower than the 289 seats needed to control parliament.  This was a setback for Macron, who was re-elected in April.  In his second and final term, he wants to strengthen European Union integration, raise the retirement age and invest in France’s nuclear industry.   According to Finance minister Bruno Le Maire this was a “democratic shock” and added that if other blocs did not cooperate, “this would block our capacity to reform and protect the French.”  The last time that a newly elected president failed to get a majority in parliament was in 1988.  Prime Minister Elisabeth Borne said that, “The result is a risk for our country in view of the challenges we have to face,” while adding that from Monday, Macron’s camp will work to seek alliances.  There is a possibility of a snap election if the situation persists.   

Eurozone Business Growth

Eurozone Business growth has slowed significantly this month by more than expected as consumers were concerned about increasing costs motivating them to defer their purchases to save money, showed a survey on Thursday.  The S&P Global’s flash Composite Purchasing Managers’ Index (PMI) which considered as a good gauge of overall economic health dropped to 51.9 from 54.8 in May.  Meanwhile, the composite new business index dropped to a 16-month low of 50 which is the threshold that distinguishes between growth and contraction.  A PMI that covers the bloc’s dominant service industry dropped to 52.8 from 56.1 and lower than the 55.5 expected.  The growth in demand for services has declined as well as firms have faced input costs rising at a near record rate.  Some of that additional cost was passed on to customers.  Nevertheless, inflation in the EU has hit a record 8.1% last month.  Costs are still on the increase and supply chains issues have disrupted the purchases of raw materials.    

US Weekly Jobless Claims

The number of Americans filing new claims for unemployment benefits dropped last week, as labour market conditions remain tightened although there are some signs of slowness.  Initial claims for state unemployment benefits dropped by 2,000 to a seasonally adjusted 229,000 for the week ended 18 June, said the Labour Department on Thursday.  The overall labour market remains tight. There were 11.4 million job openings at the end of April, with nearly two openings for every unemployed person.  In May the economy added 390,000 jobs.  The claims report also showed the number of people receiving benefits after an initial week of aid increased by 5,000 to 1.315 million during the week ending 11 June. 

China’s May Oil Imports

China’s crude oil imports from Russia climbed 55% from a year earlier to a record level in May.  According to data from the Chinese General Administration of Customs, imports of Russian oil, including supplies pumped via the East Siberia Ocean pipeline and seaborne shipments from Russia’s European and Far Eastern ports, totalled nearly 8.42 million tonnes.  That is equivalent to roughly 1.98 million barrels per day and up a quarter from 1.59 million bpd in April.  The data shows, that despite the sanctions, Moscow is able to find buyers for its oil.  Meanwhile, customs data released on Monday also showed China imported 260,000 tonnes of Iranian crude last month, its third shipment of Iran oil since last December.  Despite US sanctions on Iran, China has kept building on Iranian oil.  China’s overall crude oil imports rose nearly 12% in May from a low base a year earlier to 10.8 million bpd versus the 2021 average of 10.3 million bpd.  Concurrently data showed that China’s imports of Russian liquefied natural gas (LNG) amounted to nearly 400,000 tonnes last month, 56% more than in May 2021.   

UK Inflation

Increasingly food prices have had an impact on British consumer price inflation hitting a 40-year high of 9.1% last month (April:  9%).  This is the highest rate out of the Group of Seven countries. Records from the Office for National Statistics also show that inflation in May was the highest since March 1982.  The UK’s headline inflation rate in May was higher than in the US, France, Germany and Italy.  Prices for food and non-alcoholic drinks rose by 8.7% in annual terms in May, the biggest increase since March 2009 and the biggest driver of annual inflation last month.  Annual core inflation that excludes food and energy prices to give an idea of domestically generated cost pressure declined for the first time since September from 6.2% to 5.9%.  The ONS said that overall consumer prices climbed by 0.7% in monthly terms in May.  Concurrently costs paid by British factories for materials and energy which is a key determinant of prices later paid by consumers in shops were 22.1% higher in May than a year earlier, the biggest increase since the records started in 1985.      

Malta:  Retail Price Index (RPI) – May 2022

A press release dated 21 June 2022 shows that in May, the annual rate of inflation as measured by the RPI was 6.02% (April: 2022 5.67%).  The Food Index (+2.12%) was the largest contributor on annual inflation.  The Retail Price Index measures the monthly price changes in the cost of purchasing a representative basket of consumer goods and services and is closely linked to the Cost-of-Living Adjustment (COLA) increases and periodic rent payment adjustments.

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