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Macro Snapshot — Spanish inflation resumes its upward trend; South Korea’s export growth rebounds

RIYADH: Spanish 12-month inflation resumed its upward trajectory in May after falling in April as prices other than energy and food rose at their fastest pace in two decades, revealed Monday preliminary data from the National Institute of Statistics.

Spanish annual inflation accelerated to 8.7% in May from 8.3% the previous month, INE said. Year-over-year inflation stood at 9.8% in March, its highest level since 1985.

Annual inflation was higher than the 8.3% forecast by analysts polled by Reuters.

The economic fallout from Russia’s invasion of Ukraine fueled inflation around the world, including through higher energy and grain prices.

Core inflation, which excludes volatility in food and energy prices, hit 4.9% year-on-year in May, a 26-year high, from 4.4% a month earlier, according to INE data.

South Korea’s export growth rebounds

South Korean export growth is expected to have rebounded in May, but the trade balance likely remained in the red, while consumer inflation is expected to top 5% for the first time in nearly 13 years, according to a Reuters poll. published on Monday.

According to a median forecast from 19 economists, outbound shipments rose 19.3% in May from a year earlier, accelerating from the revised 12.9% annual growth seen in April and ending two months of slowdown.

Although South Korea’s economy is still under pressure from China’s COVID-19 lockdown measures and the Ukraine crisis, economists attributed the growth to the calendar effect of two more working days and a resumption of shipments to China.

According to the survey, imports outpaced exports by rising 31.9%, also rising from 18.6% in April to the fastest rise in four months.

The country’s trade balance was projected as a deficit of $2.59 billion, according to a median of 16 forecasts, after a deficit of $2.5 billion the previous month.

German inflation hits 8.7%

German inflation rose more than expected in May, pushed by steadily rising energy prices since the start of the war in Ukraine, data showed on Monday.

Consumer prices, harmonized to make them comparable to inflation data from other EU countries, rose 8.7% a year, compared to 7.8% in April, the Federal Office announced on Monday. statistics.

A Reuters poll of analysts had indicated an overall annual German HICP reading of 8% in May.

Turkish inflation at 76.55%

Turkey’s inflation rate is expected to have hit a nearly 24-year high of 76.55% in May due to high food and energy prices as well as a weaker pound, it revealed. a Reuters poll on Monday, while the median estimate for the end of the year rose to 63.5 percent.

Turkey’s consumer price index has jumped since last fall as the lira weakened after the central bank embarked on a long-desired 500 basis point easing cycle in September by President Recep Tayyip Erdogan.

A falling pound and rising food and energy prices pushed inflation to 69.97% in April, the highest in 20 years, despite commodity tax cuts and government subsidies for some electricity bills to ease the burden on household budgets.

The median estimate from 14 institutions in the Reuters poll for annual consumer price inflation in April was 76.55%, with forecasts ranging between 72.50% and 80.40%.

Growth in Japan will be weaker

Japan’s economy will grow at a weaker-than-expected pace this quarter despite hopes of a strong rebound in consumption after showing resilience in the three months to March, according to a Reuters poll of economists .

The world’s third-largest economy is likely to be hampered by slowing economic growth in China and a surge in global commodity prices – two issues that could hurt Japan’s key manufacturing sector, according to the poll.

However, the slower expansion still indicates that growth will be strong enough for the economy to return to pre-coronavirus pandemic levels of late 2019 this quarter, about 70% of survey respondents said.

According to median forecasts from 36 analysts in the May 18-27 poll, the economy is expected to grow 4.5% annualized this quarter, below April’s estimate of 5.1% growth.

“The speed at which the economy is recovering at home is slow,” said Takumi Tsunoda, senior economist at the Shinkin Central Bank Research Institute.

UK inflation expectations remain at elevated levels

The British public’s inflation expectations have remained stable this month, but at elevated levels likely to keep the Bank of England alert to rising price risks, according to a survey released on Monday.

US bank Citi and polling firm YouGov said their indicator of inflation expectations five to 10 years ahead remained at 4.2% in May, unchanged from April.

Public inflation expectations for the next 12 months rose slightly to 6.1%, equaling March’s record, from 6% in April.

Citi economist Benjamin Nabarro said the numbers would likely mean the BoE remains concerned about medium-term inflation expectations.

“However, we see little in today’s data that should add further momentum to an outsized 50 basis point move,” he said, referring to the possibility of a rise in price. half a percentage point in interest rates.

(Contributed by Reuters)


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