Take Two: Eurozone inflation eases; Labour wins landslide UK election victory
- 08 July 2024 (3 min read)
What do you need to know?
Eurozone annual inflation eased in line with expectations to 2.5% in June from 2.6% in the previous month, according to a flash estimate. Services prices remained persistently high at 4.1%, which partly offset slower growth in fresh food and energy prices. Core inflation, which excludes energy, food, alcohol and tobacco, remained unchanged at 2.9%. European Central Bank President Christine Lagarde said last week that Eurozone inflation “is projected to return to 2% in the latter part of next year”. Meanwhile, minutes from the latest Federal Reserve meeting showed officials would not cut interest rates “until additional information had emerged to give them greater confidence” in the inflation path.
Around the world
Following 14 years of Conservative rule, the Labour Party won the UK general election by a landslide with leader Keir Starmer now the nation’s new Prime Minister (PM). Many prominent Conservative politicians lost their seats in the election, including Liz Truss, who very briefly served as PM in 2022. The immediate future will be busy for the new PM with a NATO meeting this week, before the King’s Speech next, however the Autumn Budget – expected to be held in early October – will likely be the first event to showcase the new government’s priorities. The UK’s FTSE 100 index was marginally up in early trading on Friday following the announcement of Labour’s victory.
Figure in focus: 2.9%
Japan’s economy contracted by 2.9% in the first quarter (Q1) on an annualised basis, more than the 1.8% previously estimated, after unscheduled corrections were made to construction orders data. GDP growth for Q4 last year was also revised down to 0.1% from 0.4%, while Q3 contracted 4.0% instead of the 3.7% decline reported. Meanwhile the closely watched Tankan business sentiment survey showed large manufacturers were more positive than expected in the three months to June, fuelling expectations that the Bank of Japan could hike interest rates again after ending its negative rate regime in March.
Words of wisdom
Mission 2025: A coalition of business leaders and organisations that are urging governments to align their upcoming national climate plans with the Paris Agreement target of limiting global warming to 1.5°C. The initiative comes less than a year ahead of the February 2025 deadline for countries to submit their climate plans (or Nationally Determined Contributions) to the United Nations for the 2025-2035 period. Mission 2025 is convened by Groundswell – a collaboration between the Bezos Earth Fund, Global Optimism and Systems Change Lab and has the backing of some of the world’s biggest companies.
What’s coming up?
On Monday France will receive final results from its parliamentary election (on Sunday). China will release its latest inflation figures on Wednesday, with Germany and the US following with their own respective data reports on Thursday. The same day sees the UK publish GDP growth for May. On Friday, Japan publishes final industrial production figures for May.
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