US Inflation Drops Below 3% and Highlights from the Global Economy: A Weekly Round-Up
Published: August 16, 2024 – Updated: June 3, 2025
As global economies adapt to shifting fiscal landscapes, this week’s round-up from the World Economic Forum highlights crucial developments in finance, particularly in the United States and the United Kingdom.
US Inflation Dips Below 3%
In a positive sign for U.S. consumers, inflation has slowed significantly, reaching an annual rate of 2.9% in July—the lowest level recorded in nearly 3.5 years. According to the Labor Department, this decrease follows three consecutive months of stable consumer prices and a slight uptick in producer prices, suggesting a downward trend in inflation rates.
Scott Anderson, chief economist at BMO Capital Markets, commented on the report, saying, "This report shows continued progress towards the Fed’s inflation goals. Nothing in it would keep the Fed from cutting in September, but market hopes for a bigger cut still seem like a long shot." Despite the promising figures, persistent inflation pressures, especially in sectors like housing, suggest that a significant interest rate cut by the Federal Reserve remains uncertain.
July’s consumer price index recorded a modest 0.2% increase, largely propelled by a 0.4% rise in shelter costs, indicating that while inflation may be stabilizing, the path to recovery is still fraught with challenges.
UK Emerges as Fastest-Growing G7 Economy
The United Kingdom has emerged as the fastest-growing economy in the G7 during the first half of 2024, with the Gross Domestic Product (GDP) rising by 0.6% between April and June, culminating in a year-on-year growth of 1.3%. This follows a recession experienced in late 2023. The growth in the services sector, particularly in fields such as scientific research, IT, and legal services, played a pivotal role in driving this economic rebound, as per the Office for National Statistics. This promising economic outlook comes at a crucial time for Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves, who are looking to solidify their positions ahead of upcoming elections. However, experts caution that sustaining this growth trajectory may prove challenging, with potential tax increases on the horizon.
The Bank of England’s decision-making process will be closely scrutinized; after a period of stalled growth attributed to weak services, market analysts anticipate the central bank may hold off on further interest rate cuts.
International Economic Updates
Several noteworthy developments have emerged globally concerning economic performance:
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China: Factory output continues to languish, slowing for the third consecutive month in July. Industrial output grew by just 5.1% year-on-year, falling short of expectations. In contrast, retail sales saw a surprising uptick of 2.7%, presenting a mixed economic landscape amid concerns for policymakers.
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United States: The Federal Reserve’s interest payments have surged, adding over $100 billion to the national interest bill in the past year—more than the total annual spending by several major government agencies, including NASA and FEMA.
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European Central Bank: An overwhelming majority of economists predict two additional rate cuts of 25 basis points each in September and December, bringing the deposit rate down to 3.25%.
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New Zealand and Philippines: Both countries are shifting their monetary policies, with New Zealand’s central bank making its first rate cut in four years and the Philippines also reducing its interest rates to stimulate growth.
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Ghana: Consumer inflation in Ghana has eased for the fourth consecutive month, now at 20.9% year-on-year, down from 22.8% in June.
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Norway and Switzerland: Norway’s central bank maintained its key deposit rate at 4.5%, reflecting concerns over inflation while Switzerland saw a modest GDP growth of 0.5% in Q2 as its service sector buoyed the economy amidst export challenges.
These reports highlight the ongoing fluctuations in global economic performance and the proactive measures taken by various governments and central banks. As countries navigate these economic conditions, stakeholders remain focused on both immediate and longer-term fiscal strategies.
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Stay updated on the latest trends in economy and finance by following our week-to-week analysis and insights from around the world. The World Economic Forum continues to work towards improving the global economic framework, focusing on sustainable practices that foster growth and stability.
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