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Economic Outlook: Inflation Declines Across Europe and US
2024-08-30 09:00:09
Economy
Inflation
Europe

Economic Outlook: Inflation Declines Across Europe and US

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In August, inflation across various European countries and the US showed signs of decline. Consumer prices in Germany and France saw a decrease, with the possibility of lower interest rates by the European Central Bank.

The Eurozone experienced a three-year low in inflation at 2.2%. In the US, the Federal Reserve indicated a potential interest rate cut following falling inflation and a softening job market.

Despite the positive market response, inflation has impacted sectors such as housing, with UK house prices falling for the first time since April. The UK also witnessed growth in borrowing rates post mini-budget.

While the Bank of England reduced rates, it cautioned against drastic cuts to control inflation. Overall, the economic landscape is navigating fluctuations in inflation rates and interest rate considerations across different regions.

Related news on that topic:

Ifo Predicts Inflation to Stay Below Two Percent Soon

According to the Ifo Institute, inflation is expected to remain below the European Central Bank's target of two percent in the upcoming months. Energy prices are notably lower compared to a year ago. While other goods and services may see a slight increase of about 2.5 percent, surpassing the ECB goal. Businesses' price expectations have decreased, especially in the industrial and service sectors. However, some sectors like gastronomy anticipate price hikes. Despite a slight rise in July, August's inflation rate in Germany is projected to be lower. Spain's inflation slowed to 2.2% in August, driven by lower fuel and food prices, although the service sector's prices, influenced by tourism, increased, raising concerns about the economy's recovery from the inflation crisis.

Inflation in Germany Falls to 1.9 Percent

Germany's inflation rate surprisingly fell to 1.9% in August, the lowest level since 2021. This has led to expectations of rate cuts by the European Central Bank (ECB). The drop in inflation is mainly due to lower energy prices, while services have become more expensive. Despite rising real wages, consumer sentiment has weakened, and private consumption has declined. However, experts warn that inflation could rise again, as high wage increases may lead to higher production costs. The ECB may use the latest inflation figures as an argument for further rate cuts in September. While the lower inflation rate is positive for consumers, many remain cautious about spending. The inflationary pressure from services continues to be a concern, and the core inflation rate remains high at 2.8%. The German economy is facing challenges, with sluggish growth and concerns of a possible recession. Overall, the inflation outlook remains uncertain, and the ECB aims to maintain price stability with a target inflation rate of 2%.

Read 9 more recent news on this topic

The press radar on this topic:

The Street
31. August 2024 um 23:03

Fed officials' new outlook says when interest-rate cuts will happen TheStreet Daily Newsletter

Economy
Finance
Politics
The Federal Open Market Committee, the Fed's rate-making body, expressed satisfaction with falling inflation and easing jobs market. Some members thought data warranted a 25 basis point rate cut at the July meeting, but the FOMC decided to hold off. The Fed's key interest rate - the federal funds rate - has been at 5.25%-to-5.5% level. Fed Chairman Jerome Powell may discuss the July meeting at the Jackson Hole symposium. Wall Street was initially delighted by the news, with the S&P 500 index j..
rp_online
29. August 2024 um 12:10

Noticeable Decline: Inflation Falls to 1.9 Percent in August

Economy
Finance
Federal Statistical Office: Consumer prices 1.9% above the previous year; European Central Bank could lower key interest rates with falling inflation; Financial markets expect interest rate cut in September.
AFP
30. August 2024 um 07:50

Inflation in France weakens to below two percent

Economy
Politics
Finance
Inflation in France below 2%; decline in the inflation rate to 1.9% in August; energy prices as the main driver; food and service prices have risen less strongly; Possible interest rate cut by ECB.
The Guardian
30. August 2024 um 14:14

UK house prices fall for first time since April, says Nationwide

Finance
Economy
UK house prices fell 0.2% in August to £265,375, marking first drop since April; annual growth rose to 2.4%, fastest since December 2022; resilience despite higher rates; Truss/Kwarteng's mini-budget led to surge in borrowing rates; Halifax forecasts continued growth, as BoE cuts rates from 5.25% to 5%; high prices make raising deposit more challenging; BoE warns against expecting large rate cuts to curb inflation; previous monthly increases were 0.2-0.4%.
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