Financial Awareness Day

This Financial Awareness Day, we’re here to highlight some top tips that can be implemented to improve your financial awareness:

• Get smart about your money – Financial Awareness Day is a great time to set up a budget and review your income and spending habits​
• Track your spending – Track your expenses by making a simple list or try out some online tools or apps that can help. You might be surprised at first but that’s okay, after all, knowledge is power! And being realistic is what’s most important.
• Keep an eye on your debt – whether that be student loans, credit card bills or a mortgage, and ensure you have a plan for repayments.
• Educate yourself – Read, read, read! There are scores of books, articles and online resources that are accessible to help your understanding of financial concepts and raise confidence when dealing with money matters.
• Make your savings work harder – Learn about the different types of investments available for long-term savings such as stocks and bonds.
• Consult a financial specialist – A professional can help you create a personalised financial plan, offer investment advice and answer your questions.

The importance of financial stability cannot be overstated as it is closely tied to positive overall wellbeing. Managing your finances effectively can also support positive emotional, social and physical health. This day serves as a reminder to regularly evaluate our financial habits, set meaningful financial goals, and take actionable steps toward achieving better financial wellbeing. So what are you waiting for, get started today!

The Noise

• US consumer prices rose 2.9% year-on-year in July, the slowest annual increase in over three years, opening the door wider for the Federal Reserve to cut interest rates next month. The increase in CPI was lower than expected and marks a third straight month of tame inflation. Slowing inflation aligns with anecdotes from businesses that consumers are pushing back against high prices, doing so through bargain hunting, cutting back on purchases and trading down to lower-priced substitutes. Looking at inflation just for July, the CPI rose 0.2% from June, with increases in the cost of housing accounting for almost 90% of the rise.
• The UK economy recorded a second successive quarter of strong growth in 2024, as GDP grew 0.6% in the second quarter of 2024 after a 0.7% expansion in the first quarter. The economy lost some of its positive momentum however at the end of the quarter, as heavy rain hurt retail sales and a doctor’s strike contributed to a 1.5% drop in healthcare activity. This resulted in monthly output growth slowing to zero in June from 0.4% in May, uncertainty in the run-up to the July 4th election having also potentially weighed on growth in June. Earlier this month, the BoE raised its annual growth forecast for 2024 to 1.25% from 0.5% due to a stronger than expected start to the year. Looking ahead to the rest of the year, the Bank of England were less upbeat, seeing growth slow to 0.4% in the third quarter and 0.2% in the final three months of the year, which it views as closer to the economy’s underlying growth rate.
• A strike at mining giant BHP’s huge Escondida mine in Chile has sent global copper prices up as the ongoing standoff between the company and workers starts to spread worries about supply of the red metal. The Escondida mine, located in the Atacama desert in Northern Chile is the world’s largest copper mine, accounting for almost 5% of global supply in 2023. Tensions rose after pay negotiations between BHP and the workers union collapsed, with workers seeking a bonus of 1% of shareholder dividends per worker ($36,000) compared to the $29,000 bonus reportedly offered. Operations have continued at the mine, though the workers union have reported several parts have been put offline.

The Nuance

After two months of inflation holding exactly at the Bank of England’s 2% target, annual inflation for the 12 months to the end of July rose to 2.2%. Crucially, this pick up was less than expected, as economists had predicted prices to rise by 2.3% in July. It also marks the first month without disinflation (a decrease in the rate of inflation) so far this year. Financial markets are now pricing in a 44% chance of a second quarter-point BoE rate cut this year in September, up from 36% before the data was released. This week’s inflation data should give the BoE Monetary Policy Committee some measure of confidence that domestic price pressures are less likely to derail a sustainable return to the 2% target.

Helping further reassure the Bank of England that inflation pressures are easing, British pay grew at its slowest pace in almost two years. Average weekly earnings, excluding bonuses, were 5.4% higher than a year earlier in the three months to the end of June, falling from 5.8% in the three months to May. Pay is still growing at nearly double the pace the BoE sees as compatible with keeping inflation at 2%, though lower inflation will help reduce wage pressures over time.