The noise
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UK inflation declined considerably in the 12 months to July, dropping from 7.9% in June to 6.8%, as the fall in energy prices over the past year resulted in the smallest rise in the cost of living since February 2022. Despite this move in the right direction, economists are still predicting that interest rates will rise further to continue to reign inflation in. The likely reason for this being core inflation - the measure of inflation that strips out energy and food prices - remained unchanged at 6.7%.
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As the developed economies have seen interest rates rise over the last 12 months, China has cut its key interest rates in a bid to bolster growth. China’s industrial output and retail sales growth have slowed amidst a raft of weak economic indicators released in the past few weeks, including deflation. The Chinese government has even suspended publishing youth jobless data, as it reached a record high in June of 21.3%.
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Bayer, Shell, and a Singaporean state-owned firm have collaborated to reduce global methane emissions in rice cultivation. Paddy rice cultivation is responsible for approximately 10% of global methane emissions, and consumes around one-third of global fresh water. The project aimed at improving sustainability in rice farming looks to implement new farming methods, that will reduce methane emissions, save water and improve soil health.
The numbers
The nuance
For the first time in 19 months, UK wages are set to outpace inflation for the month of July, with households finally becoming better off in real terms. The inflation data released on Wednesday indicated it fell to 6.8% in July, while we discovered that regular pay excluding bonuses rose 7.8% in June. The wage growth figure is actually the highest since comparable records began in 2001 and came in well above expectations of 7.4%. The strong momentum in wage growth will likely thwart any plans to pause interest rate hikes. Coupled with inflation not yet falling enough to prevent further rate hikes, it appears likely that one will see rates increase by 25 bps at the next Monetary Policy Committee meeting in September.
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