According to experts, the consumer price index is seen rising 0.2% in July against June, which will be the smallest advance since the start of 2021. Though the so-called core measure, which strips out energy and food, probably climbed a concerning 0.5%, reported Bloomberg.
The pace and breadth of inflationary pressures remains intense despite moderation in the overall gauge. Federal Reserve policy makers remain tilted toward large interest-rate hikes after a sizzling July payrolls report which included a larger-than-forecast pickup in hourly earning.
ALSO READ: Fed again raises US interest rate by 75 basis points to fight inflation
Earlier on July 28, Federal Reserve officials raised interest rates by 75 basis points for the second straight month.
Policy makers, facing the hottest price pressures in 40 years, lifted the target range for the federal funds rate to 2.25% to 2.5%. That takes the cumulative June-July increase to 150 basis points – the steepest rise since the price-fighting era of Paul Volcker in the early 1980s.
This week Regional Fed presidents Charles Evans of Chicago and Neel Kashkari of Minnespolis are scheduled for separate speaking events. Also, producer price index and University of Michigan consumer sentiment index will also be released.
“The July jobs report settles it – we are not in a recession. More importantly, it also means the Fed will likely have to hike by another 75 basis points in September," Bloomberg quoted economists Anna Wong, Yelena Shulyatyeva, Andrew Husby and Eliza Winger as saying.
Analysts opine that the UK economy’s first quarterly contraction in more than a year, as well as mixed signs from Chinese price data, are likely to be among the highlights. Also, rate increases may materialise in countries including Mexico, Peru, Serbia and Thailand.
Asian economy this week:
China is all set to release trade data for July on 8 August and as per predictions it may show exports a rare bright spot for the world’s second-largest economy. Though inflation statistics mid-week are expected to show continued moderation in factory-cost gains and a slight pickup in consumer-price growth.
South Korea’s jobless numbers are likely to show continued tightness in the country’s labor market, while household spending and business conditions data will give clues as to how much Australia’s tightening cycle is weighing on the economy.
Japan's producer prices data is set to show firms remaining under pressure from rising raw material costs, strengthening their case to pass those burdens on to consumers.
Also, Philippines will announce GDP data on 11 August and Malaysia posts its national accounts numbers on 12 August.
Europe, Middle East, Africa economy this week:
The Bank of England will release its GDP data for second-quarter on Friday. According to the Bank of England, the GDP data will show a second-quarter drop of 0.2%. Though he central bank forecasts growth probably resumed during the current three-month period, a prolonged slump, reminiscent of the 1990s, will then likely ensue.
The main data on industrial production for June in the euro zone will also be released on Friday and it is expected that report may also signal slowing momentum, with a median prediction to increase just 0.1%. Also, final data for the euro area’s four biggest economies will be published during the week.
Norway is supposed to release its inflation data on 10 August, Sweden on 12 August and Hungary on 9 August. Meanwhile, Ukraine will reveal its own rate of annual price growth, last reported at 21.5% for June.
Russia's data – due 10 August – may see inflation fell for a third month in July, will be closely watched for clues on the policy of the central bank, as it had cut its rate more than expected in June and said more reductions are possible.
Its GDP data for Q2 due this 12 August may show an annual drop, and give an indication of the depth of the contraction since President Vladimir Putin started his war in Ukraine.
ALSO READ: Fed to inflict more pain on economy as it readies big rate hike
Europe’s only rate decision this week will be in Serbia, where the central bank might resume faster hiking.
For Turkey, current-account data on 11 August will likely show a widening deficit, although rising tourism and services revenue may mitigate some of that.
For Egypt, the statistics on 10 August may reveal inflation accelerated further in July. Also, Rwanda’s central bank will likely increase its rate for a second time this year on 11 August, and Uganda is expected to follow suit on 12 August.
Latin America economy this week:
For the July's report, analysts see Chile’s annual consumer-price increases of 13%, more than four times the target, while for Argentina, July monthly reading may hit 7%, with the annual rate breaching 70%.
In Mexico, early estimates show move up in consumer prices over 8% are most likely, while Brazil’s July consumer price report see monthly deflation and the biggest year-on-year drop in nearly two decades. Inflation there may finally be on a long, slow glide back to target. Brazil's central bank on 3 August already raised the key rate to 13.75%, and suggested they may not be quite finished, are due 9 August.
With Bloomberg inputs.
