This Week’s Economic Highlights: US Inflation and UK Growth

Published: August 16, 2024 | Updated: June 3, 2025

As the global financial landscape continues to shift, this week brings significant news regarding economic performance in the United States and the United Kingdom, along with brief insights from various countries around the world. The latest data indicates a downward trend in US inflation, a surge in the UK economy, and a mixed bag of economic indicators from other nations.

US Inflation Drops Below 3%

In a notable development, the annual inflation rate in the United States has fallen to 2.9%, marking its lowest point in nearly three and a half years. This decrease comes alongside a slight uptick in consumer prices for July, sparking optimism that the Federal Reserve may consider cutting interest rates at its next meeting scheduled for September.

According to the Labor Department’s report, consumer prices have shown stability over the past three months, and there has been a modest increase in producer prices that further confirms the downward trajectory of inflation. Scott Anderson, the chief economist at BMO Capital Markets, commented on the situation, stating, “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 overall decline in the inflation rate, challenges remain. Rising rent prices and inflation remaining above the Federal Reserve’s 2% target complicate predictions regarding a significant rate cut next month. The consumer price index saw a 0.2% increase in July, primarily driven by a 0.4% rise in shelter costs.

UK Economy Leads G7 Growth

Across the Atlantic, the UK is seeing a remarkable economic resurgence, emerging as the fastest-growing economy among G7 countries in the first half of 2024. According to recent data, the nation’s gross domestic product (GDP) increased by 0.6% in the second quarter and shows an overall growth of 1.3% for the year.

This growth spurt, reported by the Office for National Statistics, has largely been fueled by the services sector, with significant contributions from scientific research, IT, and legal services. As Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves navigate a landscape of anticipated tax rises and tough decisions, this positive news provides a much-needed boost to their government as they approach upcoming elections. Nonetheless, experts caution that sustaining this momentum may prove challenging, especially after a stalled growth period in June. The Bank of England’s monetary policy moving forward may also be affected, particularly considering the recent stagnation in the services sector despite improvements in manufacturing.

Economic News from Around the Globe

1. China’s Factory Output
   Factory output in China has experienced a slowdown for the third consecutive month as of July, indicating a fragile recovery for the world’s second-largest economy. Year-on-year growth in industrial output was 5.1%, which fell short of expectations. However, retail sales fared better, rising by 2.7%.

2. Interest Payments in the US
   The US Federal Reserve’s interest payments have surged over $100 billion in the past year, exceeding the total expenditures for NASA, the Federal Emergency Management Agency, and the Small Business Administration combined.

3. European Central Bank Predictions
   A recent Reuters poll indicates that over 80% of economists expect the European Central Bank to implement two rate cuts of 25 basis points each in September and December.

4. New Zealand and the Philippines
   The Reserve Bank of New Zealand has executed its first rate cut in four years, lowering its benchmark rate to 5.25%. Similarly, the Bangko Sentral ng Pilipinas has cut its target rate to 6.25%, aiming to bolster economic growth.

5. Global Inflation Trends
   Consumer inflation in Ghana has continued to decline for the fourth month in a row, now standing at 20.9% year-on-year. In contrast, Norway’s central bank has kept its key deposit rate at 4.5%, illustrating the careful balancing act that central banks are performing in the current economic climate.

6. Swiss Economic Performance
   Switzerland has reported a GDP growth of 0.5% in the second quarter, reflecting strong service sector output that has helped offset challenges in exports.

In summary, the economic outlook shows varying trends across different regions, with the US appearing to gain control over inflation and the UK leading in growth among advanced economies. Meanwhile, global economic indicators remain volatile, emphasizing the need for careful monitoring and strategic responses from policymakers worldwide.

For those looking to understand the implications of these economic changes, staying informed will be crucial as the global economy continues to evolve.

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