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BOV Market Watch - Week ending 12th November 2021
12 Nov 2021
U.S. Consumer Prices Rose Sharply. The US Labour Department reported that U.S. consumer prices increased by more than expected during October, lifting the annual rate of price growth to its highest level in over thirty years. The consumer price index jumped by 0.9 percent in October, well above 0.6 percent expected, after rising by 0.4 percent in September. The bigger than expected increase in consumer prices was partly due to a surge in energy prices, which spiked by 4.8 percent in October after jumping by 1.3 percent in September. Food prices also continued to see notable growth in October, rising by 0.9 percent for the second consecutive month. The annual rate of growth in consumer prices accelerated to 6.2 percent in October from 5.4 percent in September, the highest level since November of 1990. The annual rate of growth in core prices also accelerated to 4.6 percent from 4.0 percent, reflecting the biggest jump in prices since August of 1991.

German Consumer Prices Rise At Fastest Pace Since 1993. Consumer price inflation in Germany also rose at the fastest pace since 1993, driven by higher energy prices. CPI advanced to 4.5 percent in October, from 4.1 percent in September. This was marginally lower than the 4.6 percent measured in August 1993. On a monthly basis, the CPI gained 0.5 percent in October, as expected.  Goods’ prices increased 7 percent annually driven by the 18.6 percent rise in energy product prices, while services prices were up 2.4 percent. Excluding energy prices, German inflation was 3.1 percent in October.

China’s Consumer and Producer Prices Continue to Rise in October. Consumer prices in China were up 1.5 percent, on an annual basis, in October, above expectations for an increase of 1.4 percent following the 0.7 percent gain in September. On a monthly basis, consumer prices rose 0.7 percent, up from a flat reading in the previous month. Meanwhile, Chinese producer prices jumped 13.5 percent on a yearly basis in October, beating forecasts for an increase of 12.4 percent following the 10.7 percent gain in September.

China’s Bank Lending Falls. The People's Bank of China reported that China's bank lending declined sharply in October. Banks extended CNY 826.2 billion new loans in October, sharply down from CNY 1.7 trillion in September. Total social financing decreased to CNY 1.59 trillion in October, down from CNY 2.9 trillion the previous month. Meanwhile, there are some signs that PBoC policy is turning more supportive in response to strains in the property sector, and this might be the trough in the credit cycle. Economists noted that the usual reporting lags mean that tight credit conditions will remain a headwind to economic activity for a while.

UK’s Economic Expansion Slows in Q3. The UK economy slowed momentum in the third quarter, as gross domestic product growth slowed to 1.3 percent, down from the 5.5 percent expansion seen in the previous quarter. Nonetheless, this was the second consecutive quarterly growth. This data shows that the level of GDP was 2.1 percent below where it was before the coronavirus pandemic started at the end of 2019.  On a monthly basis, GDP growth improved to 0.6 percent from a revised 0.2 percent in August. This rate also exceeded the economists' forecast of 0.4 percent. Industrial output grew 0.8 percent in the third quarter driven by the 26.3 percent increase in mining and quarrying, as a result of the reopening of sites that had previously been temporarily closed for planned maintenance. There was a 0.3 percent decline in manufacturing output, as production of motor vehicles decreased 8.2 percent in September, the largest fall since last May. Construction output fell 1.5 percent in the third quarter, after four consecutive quarterly increases, and services output grew 1.6 percent, after expanding 6.5 percent in the second quarter. The supply shortages and the hit to the real spending power of businesses and households from higher taxes and rising utility prices will mean that GDP growth might be sluggish over the next few quarters.
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).