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Retail sector data showed that food price inflation in the UK was 13.3%.

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UK food price inflation continued to rise in December, according to new sector data indicating “another challenging year for consumers and businesses”.

The annual growth of UK food prices was 13.3 percent in December British Retail Consortium said on Wednesday. That was up from 12.4 percent in November, the highest reading since trade body records began in 2005.

Gross store price inflation fell to 7.3 percent in December from a record 7.4 percent in the previous month.

The numbers indicate that families will continue to feel severe stress even in general economic inflation Levels are expected to decline this year from multi-decade highs reached in 2022.

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They also note that the rate of food price inflation of 16.6 per cent – the highest level in 45 years – reported by the Office for National Statistics for November may accelerate when the body publishes December figures later this month.

Responding to Wednesday’s data, BRC Chief Executive Helen Dickinson said: “2023 will be another challenging year for consumers and businesses as inflation shows no immediate signs of abating.”

She added that the prices of many basic foodstuffs are rising as the Russian war in Ukraine continues to drive up costs for animal feed, fertilizer and energy.

This is despite some economists suggesting that the rise in aggregate annual price levels has passed its peak. And last month the Office for National Statistics found that UK inflation was It’s down from a 41-year high 11.1 percent in October to 10.7 percent in November.

In the Financial Times Annual survey of chief economists based in the United KingdomDeAnne Julius, distinguished fellow at the Chatham House think-tank, said that “if energy prices don’t go higher because of more Russian action, inflation will fall steadily” this year.

The BRC data is in line with forecasts by the Office for Budget Responsibility, the financial watchdog, which said in November that food price pressures could persist in 2023 even as overall inflation levels begin to decline since the first quarter.

Higher food inflation would “put more pressure on household budgets,” said Mike Watkins, head of retail and business at consultancy NielsenIQ, making it “unlikely that there will be any improvement in consumer mentality” in the near term. .

Separated Scan ONS Published last month it found that in the first half of December, 45 per cent of Britons had to cut back on buying food and essentials due to the rising cost of living. Rising prices for necessities have the greatest impact on the poorest households, because on average they spend a greater proportion of their financial resources on food.

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Meanwhile, a report published by the Resolution Foundation on Wednesday highlighted that people with disabilities, who make up a third of Britain’s poorest households, are “highly vulnerable” to the cost of living crisis.

The think tank found that people with disabilities were nearly three times more likely to live in material deprivation than the rest of the population. She added that 31 percent of people with disabilities had to reduce their spending on food this winter, compared to 18 percent of the population without disabilities.

Charlie McCurdy, co-author of the report, said that “while rapidly rising prices for essentials are affecting people across the UK, it is people with disabilities who are most vulnerable to the most severe impacts”.

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Will the data reveal that US inflation has cooled again?

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Did US consumer price growth slow again in December?

Investors and economists are betting that the Fed’s aggressive monetary campaign will cause consumer price growth to slow again in December.

On Thursday, the Bureau of Labor Statistics will release consumer price index data for the previous month. Market participants surveyed by Refinitiv expected prices to have risen 6.6 percent year-on-year in December, down from a 7.1 percent increase in November. This marks the slowest pace since October 2021. Consumer prices are expected to remain flat on a monthly basis compared to an increase of 0.1 percent in November.

John Hill, a strategist at Barclays, said the decline is expected to be partly driven by lower energy prices, which included gasoline, which fell 13 percent in December.

The core CPI, which excludes the volatile food and energy components, is expected to rise 5.7 percent year-on-year, up from 6 percent in November.

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These moves will come at the end of the year in which the Federal Reserve raised interest rates from near zero to a range of 4.25 to 4.5 percent. The effects of the historical pace of increases have been rather sluggish: inflation peaked in June, but continued to rise above 8 percent through September.

December inflation data will be an important piece of information for the Fed’s two-day meeting starting on January 31 and could help determine whether the central bank raises interest rates by 0.5 percentage point, matching last month’s increase, or slowing the pace of increases further. . Kate Duguid

What will the industrial production data reveal about the manufacturing sector in Europe?

The past year was difficult for many European manufacturers and conditions are unlikely to improve much in November, when industrial production was expected to suffer its second consecutive monthly decline.

The energy crisis triggered by Russia’s invasion of Ukraine, combined with continued disruption to global supply chains and weak economic growth, has made 2022 a difficult year for many industrial clusters in Europe.

Economists polled by Reuters expect industrial production in the euro zone to have fallen 0.2 percent when those figures are released on Friday. Earlier in the week, national figures for Germany, France and Italy — the bloc’s three largest economies — were also expected to reveal slight contractions in industrial production.

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The gloomy outlook for the German industrial sector was underlined last week, when factory orders data for November revealed a much larger-than-expected decline of 5.3 percent from the previous month.

However, economists believe that it will take some time before a sharp drop in demand affects production due to the large backlog of orders since the outbreak of the coronavirus pandemic in 2020. Underlining this, sales volumes in German manufacturing remained high in November, rising 2.1 per cent.

“Weak demand is likely to have a weak effect on production,” said Ralf Solven, an economist at Germany’s Commerzbank. “After all, most industrial companies have a large number of orders backlog, which they can now solve.” Martin Arnold

Did the British economy shrink more?

The British economy is expected to continue to struggle at the end of last year under the pressure of high inflation and rising borrowing costs.

Economists polled by Reuters expected the UK’s gross domestic product to have fallen 0.3 percent between October and November, when the data is released on Friday.

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Sandra Horsfield, an economist at Investec, noted that the British economy has been on a downward trend since May 2022, when inflation began to rise. The government provided aid to households and businesses facing a cost-of-living crisis, which may have boosted the economy in November.

A reversal of the National Insurance hike that took effect in April 2022 from November onward, which left after-tax paychecks somewhat higher than they were in October, should also support consumers’ ability to spend. Moreover, power generation appears to have rebounded somewhat after weakness in October, as higher-than-normal wind speeds should have fueled industrial production.

But Horsfield said these factors and other government aid absorbed only part of the blow.

Add to that the constraining effect on higher interest rate activity, and the likelihood is that GDP will trend lower for some time – particularly as it spreads [industrial] “The strikes cause some additional disruption,” Horsfield said.

The economy contracted in the third quarter of 2022 and the November data will provide more information about the final quarter. Many economists expect the UK to have already entered a recession that will last for most of 2023.

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“The bright side of this particular cloud is that we expect it to help dampen price pressures,” Horsfield said. Valentina Romy

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Economy, row over energy and drugs loom at North American summit by Reuters

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© Reuters. FILE PHOTO: Supporters of Mexican President Andres Manuel Lopez Obrador gather before his arrival at the White House, for his meeting with US President Joe Biden in Washington, US November 18, 2021. REUTERS/Kevin LaMarque.

By Dave Graham

MEXICO CITY (Reuters) – North American leaders aim to give a new impetus to strengthening economic ties at a meeting this week, even as a continuing row over Mexico’s energy policies distracts from cooperation on other issues such as immigration.

Mexican President Andres Manuel Lopez Obrador will host his US counterpart Joe Biden and Canadian Prime Minister Justin Trudeau for talks in Mexico City from Monday to Wednesday, the first summit between the three countries since late 2021.

“A meeting like this is so we can continue to move forward with economic integration,” Lopez Obrador said this week.

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However, Mexico remains mired in an energy dispute with the United States and Canada, which argue their companies have been hurt by Lopez Obrador’s campaign to give market control to cash-strapped state energy firms.

López Obrador, a militant leftist, says his policy is a matter of national sovereignty, on the grounds that previous governments have skewed the energy market in favor of private interests.

Washington and Ottawa believe his actions violate the United States-Mexico-Canada Trade Agreement (USMCA), and have initiated dispute settlement proceedings against Mexico, souring the mood for cooperation on jobs and investment.

Trudeau told Reuters on Friday that he will make the case that resolving the energy dispute will help bring more foreign investment into Mexico, and he is confident progress will be made.

Others argue that the time for negotiation is over.

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Aindriu Colgan, director of tax and trade policy at the American Petroleum Institute — whose members include ExxonMobil (NYSE:) and chevron (NYSE: 🙂 – said it was time to contact the Dispute Commission because “Mexico is flagrantly violating the USMCA.”

Ahead of the summit, officials publicly stressed North America’s shared economic interests, while privately downplaying prospects for a major breakthrough in the energy dispute.

“They will do everything they can to make it look like a happy rally,” said Andres Rosenthal, Mexico’s former deputy foreign minister. “As long as López Obrador keeps immigrants out of the border area, Biden will be happy.”

SNUBS, fentanyl, migration

Since the COVID-19 pandemic rippled through supply chains, policymakers have stepped up calls for companies to move their businesses out of Asia to make the region’s economy more resilient.

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As part of that campaign, López Obrador, who in June declined Biden’s invitation to the Summit of the Americas in Los Angeles in protest of his exclusion of the leaders of Cuba, Venezuela and Nicaragua, wants to discuss his plan to boost solar power in the North. Mexico and securing American financial support for it.

Biden aides say they expect a positive tone at the meeting after a new immigration plan was announced this week, and Mexico discovered a high-profile cartel boss.

Ovidio Guzmán, son of imprisoned King Joaquín “El Chapo” Guzmán, is the leader of the Sinaloa Cartel, which is blamed for aiding the fatal overdose of the synthetic opioid fentanyl in the United States.

The US government said stemming the flow of fentanyl would be an important part of the talks on combating the drug cartels. Supply chains, climate change and migration will also be discussed.

A US official, who spoke on condition of anonymity, said any tensions over the snub of Lopez Obrador in June had dissipated and the two presidents were better positioned to work together.

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Mexico’s government has repeatedly urged the United States to allocate funds to Central America and southern Mexico to boost development and stop migrants’ journey north from a region that has long been one of the poorest on the continent.

It also urged Washington to make it easier for immigrants to find jobs in the United States. A Mexican official said the deal unveiled Thursday to expand cross-border expulsions will do so because of a trade-off it includes to make it easier for migrants to enter by air.

Mexico also recently took issue with the United States with a plan to ban imports of genetically modified corn. He said that although López Obrador’s government had agreed to delay the ban until 2025, the issue would be discussed.

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Top 5 Things to Watch in the Markets Next Week by Investing.com

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© Reuters

Written by Noreen Burke

Investing.com – US inflation numbers and the start of corporate earnings season will be the highlights of an otherwise quiet week in the economic calendar. December inflation data will help influence the size of the Fed’s next rate hike, while corporate earnings will give important insight into the health of the economy amid fears of a potential slowdown. UK GDP, Japanese inflation, and Eurozone data will also be in focus. Here’s what you need to know to start your week.

  1. US consumer price index

The US Consumer Price Index for December is due Thursday as economists expect core inflation to pick up from a year earlier. Any sign of price pressures continuing to ease could not only reinforce the view that the Fed is nearing the end of its most aggressive tightening cycle in decades, but could also fuel speculation that rate cuts could come later this year.

US data on Friday showed that payrolls for December expanded more than expected even as wage increases slowed and services activity contracted, easing concerns about the Federal Reserve’s monetary policy path.

Federal Reserve officials on Friday acknowledged calming wage growth and other signs of the economy gradually slowing, with Atlanta President Rafael Bostick hinting at a quarter percentage point opportunity at the Fed’s next policy meeting Jan. 31-February 1. basis point in December.

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  1. Earnings season begins

Companies are set to begin reporting fourth-quarter earnings next week as investors look for signs of a potential economic slowdown that hit earnings.

On Friday alone, reports are due from the banks Wells Fargo (NYSE:) Citigroup (NYSE:), Bank of America (NYSE:) and JPMorgan (NYSE:), healthcare giant UnitedHealth Group (NYSE:), asset manager BlackRock (NYSE:) and Delta Air Lines (NYSE:).

Analyst consensus estimates put fourth-quarter earnings down 1.6% from the year-ago period, according to IBES Refinitiv. Some predictions for 2023 are still very rosy in this light Recession Risks.

Stocks may be more expensive than they appear if current earnings estimates do not fully account for an economic slowdown, while any downturn could dampen what investors are willing to pay for stocks.

  1. UK gross domestic product

The UK releases November figures on Friday on the back of historic cost-of-living pressures amid twin levels of inflation, transport and public sector strikes, and a housing market slump, as the country faces what is likely to be a prolonged recession. .

Recent data showed that after nine consecutive rate hikes by the Bank of England, and more to come, British mortgage approvals fell to their lowest level in November since the pandemic-induced recession in June 2020.

As price pressures mount and borrowing costs soar, Prime Minister Rishi Sunak has pledged to halve inflation, grow the economy, reduce public debt and cut waiting lists for health services.

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However, analysts at Deutsche Bank see the continuation of high inflation this year, interest rates have not been cut until 2024 and that financial policies have become more austere, while analysts at Barclays expect the British economy to continue to contract until the end of the third quarter of 2023.

  1. Eurozone data

Germany will publish an estimate on Friday that will show the impact of the energy crisis triggered by Russia’s war in Ukraine on the eurozone’s largest economy.

The broader Eurozone will release data on the same day. Higher costs of energy imports have tipped the bloc’s trade balance from a surplus to a deficit, but the deficit narrowed in October as gas prices fell and market watchers will be looking to see if this trend continues in November.

Industrial production is expected to post a slight rebound after falling in October.

  1. Tokyo swell

Market watchers will be closely watching Tokyo’s inflation numbers on Tuesday, after last month’s report first pointed the market to a possible policy shift by the Bank of Japan.

— which tops national numbers, often for several weeks — rose to a four-decade high in November.

Less than a month later, the Bank of Japan adjusted its control of bond yields allowing long-term interest rates to rise further in erratic markets. The move was intended to mitigate some of the costs of prolonged monetary stimulus.

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Prices were boosted to seven-month highs as expectations of a more hawkish turnaround mounted, even as BoJ officials stressed the move was a one-off. The Bank of Japan will hold its next policy meeting on January 18th.

Reuters contributed to this report

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