US consumer inflation hits its highest level in four decades; World Bank lowers growth forecast for South Asia — Macro Snapshot

RIYADH: Consumer inflation in the United States hit a new four-decade high in March when it hit 8.5% largely on gasoline prices surging to a record high, but the data had enough weak spots for some Wall Street pundits to say “peak inflation” was at hand.

Fed Governor Lael Brainard, speaking on the heels of Tuesday’s consumer price index release, said the fact that a primary measure of the pace of inflation from month to month the other slowed in March gave him “confidence that we will be successful in achieving” the Fed’s 2% inflation target.

UK inflation at 30-year high

British consumer price inflation hit its highest level in three decades last month, mounting pressure on embattled Prime Minister Boris Johnson and his finance minister Rishi Sunak to ease pressure on the cost of living.

The annual inflation rate climbed to 7% in March from 6.2% in February, its highest level since March 1992 and more than expected by most economists in a Reuters poll, official data showed on Wednesday.

Bank of Canada eyes rate hike

The Bank of Canada is expected to announce its first half-point interest rate hike in more than 20 years on Wednesday as the central bank accelerates its tightening schedule to combat an overheated economy, analysts said.

Canada’s six largest banks are all forecasting a half-point increase to 1.0% from 0.5% when the central bank releases its rate decision at 10 a.m. ET (1400 GMT), rather than the quarter-point increase that the bank usually favors. The money markets are seeing about an 85% chance of a bigger increase.

“Inflation is well above the Bank of Canada’s target, the economy has fully recovered from pandemic-related losses and the unemployment rate is the lowest since at least the mid-1970s, which absolutely does not justify monetary policy is still stimulative,” said Benjamin Reitzes, Canadian Rates and Macro Strategist at BMO Economics, in a note.

Portugal’s 2022 budget aims to reduce the deficit

The Portuguese government slightly reduced growth prospects for this year and saw inflation pick up fueled by the war in Ukraine, but kept its promise to reduce the budget deficit to 1.9% of GDP, according to its plan. 2022 budget unveiled on Wednesday.

The country rolled over last year’s spending plan so far this year after parliament rejected the then-minority Socialist government’s budget in October, triggering a snap election. The ballot gave the Socialists a working majority and the new government was sworn in on 30 March.

Last year, the budget deficit was 2.8%.

The draft budget that was sent to parliament on Wednesday sees the economy grow by 4.9% this year, below a previous forecast of 5% announced last month, and in line with last year’s expansion.

He expects harmonized inflation in Portugal to pick up to 4% this year from 0.9% in 2021, fueled by a sharp rise in energy prices after Ukraine invaded Ukraine. Russia in February.

The debt-to-GDP ratio, which ended last year at 127.4% after falling from 2020 record highs of 135.2%, is expected to end this year at 120.7%.

World Bank lowers growth forecast for South Asia

The World Bank on Wednesday lowered its economic growth forecast for India and the wider South Asian region, citing worsening supply bottlenecks and rising inflation risks caused by the Ukrainian crisis.

The international lender lowered its growth estimate for India, the region’s largest economy, to 8% from 8.7% in the current fiscal year to March 2023 and cut by one percentage point growth prospects for South Asia, excluding Afghanistan, at 6.6% .

Consumer inflation in Ghana

Consumer price inflation in Ghana accelerated to 19.4 percent year on year in March from 15.7 percent the previous month, the statistics service said on Wednesday, a record high since figures from the inflation were rebased in 2018.

The West African nation’s latest inflation reading far exceeded the government’s target range of 8% plus or minus 2%.

Chinese imports drop unexpectedly

China’s imports fell unexpectedly in March as COVID-19 restrictions in large parts of the country hampered cargo arrivals and weakened domestic demand, while export growth slowed, prompting analysts to expect a deterioration in trade in the second quarter.

Falling trade figures are expected to bolster expectations of increased policy support from the government, with an adviser calling on Wednesday for cuts in bank reserve requirements and interest rates to boost a flagging economy.

Greek unemployment drops to 12.8% in February

Greece’s unemployment rate fell to 12.8% in February, from an upwardly revised 12.9% in the previous month, data from statistics service ELSTAT showed on Wednesday.

After reaching a record level of 27.8% in September 2013, the unemployment rate in Greece is falling, but it remains the highest in the euro zone.

Unemployment affected women more than men, with respective rates in February of 16.1% and 10.1%.

Greece’s economic rebound from the pandemic slowed in the fourth quarter of last year, weighed down by net exports, but for the year as a whole the economy grew by 8.3% after a sharp decline in 2020.

The final CPI for March in Spain increases

Spanish consumer prices rose 9.8% year-on-year in March, the fastest pace since May 1985, according to final official data released on Wednesday, confirming a flash estimate published two weeks ago.

Core inflation, which excludes volatility in food and energy prices, was 3.4% year-on-year, the same level as the flash estimate, and up from 3, 0% a month earlier, according to data from the National Institute of Statistics.

(Contributed by Reuters)