PPI Input y/y: 30.3%, forecast 29.0%, pr. 28.7%, 27.9%

See "Producer Price Index Input" for commentary

For 2nd Quarter
Provided by: Statistics New Zealand


CPI y/y: 4.0% forecast 3.8%, pr. 3.4% (1Q '08), 3.2% (4Q '07)

Inflation in the June quarter accelerated to the fastest pace since the June quarter in 1990. Higher petro prices led to higher transport prices, which pulled the quarterly inflation rate above expectations, and more than double the March quarter reading of 0.7%. Inflation is accelerating, while the slowdown is spreading and deepening. Like its neighboring central bank the RBA, the RBNZ may be willing to compromise some initial slowdown if that can lead to a drawdown on inflationary pressure. So far, the data has been diverging from that scenario.

For June
Provided by: British Retail Consortium (BRC)
May's Release: PDF
June's Release: PDF 

There wasn't much good news in today's BRC report on same store sales at the retail level. Sales slumped on a broad base, except for gains in the food and drink sector. From the release:

Clothing and footwear fell back sharply after May’s sun-driven boost. Furniture and homewares, both large and small, weakened further below year-earlier levels, despite continued discounts and promotions.

The report also highlighted a sliding consumer confidence as household budgets get tighter and shoppers increasingly "price-conscious". Retailers have been trying to support sales through discounts, and Stephen Robertson, Director General of BRC is calling the government to help out. "Surely Government should also be helping hard-pressed customers by not piling-on new tax burdens and resisting its instinct for costly new business regulation which ultimately pushes up prices." Unlike Bush's stimulus check, is hoping small businesses get a break.

Provided by: Reserve Bank of Australia
Official Release: Minutes

From the Release: "In recent months, the Board had held the cash rate steady at 7.25 per cent, reflecting the assessment that there had been a significant tightening in financial conditions, which would work to slow demand and reduce inflation over time. The recommendation put to the Board at this meeting was that the cash rate continue to be held steady.

In assessing this recommendation, members concurred that the evidence becoming available in the latest month had added weight to the view that the current stance of policy, in conjunction with the more general tightening in financial conditions that had occurred since the middle of last year and most recently the additional rise in fuel costs, were working to restrain demand. Consumer spending had slowed significantly and there had been a marked decline in the growth of credit to both households and businesses. Surveys indicated that confidence had fallen further over the past month and asset prices were weakening. In addition, there were some early signs of softening in labour market conditions. The deterioration in conditions in financial markets over the past month had probably tightened financial conditions a little further.

On the other hand, members expected that the CPI for the June quarter, which would be released before the next Board meeting, would show another high reading. These high outcomes risked lifting inflationary expectations and/or wage demands. If that occurred, it would make inflation more difficult to reduce over time.

Members were also conscious that the rise in the terms of trade that was taking place would add substantially to national income and that this could translate into renewed growth in spending. This meant that there remained considerable uncertainty about the outlook for demand and inflation.

On balance, while members remained concerned about the current rate of inflation and the uncertainties about the outlook, the increasing signs that demand was slowing suggested that the existing policy setting was exerting the appropriate degree of restraint. Provided demand continued to evolve as expected, inflation was likely to decline over time.

Weighing up the various factors, the Board judged that the current stance of monetary policy remained appropriate and would continue to evaluate prospects for economic activity and inflation in the light of new information."

For June
Provided by: Office of National Statistics

Core CPI y/y: 1.6%, forecast 1.5%, pr. 1.5% (May), 1.4% (Apr)
CPI m/m: 0.7%, forecast 0.4%, pr. 0.6% (May), 0.8% (Apr)

UK inflation jumped to an annual pace of 3.8% in June, from 3.3% in May, surprising forecasts on the upside. Its the fastest pace in at least 11 years (record began in 1997), and will keep pressure on the Bank of England to keep rates steady or even consider a rate increase. At the same time, the economy continues to be weighed down by a correction in housing, which has affected consumer confidence and spending. With no relief coming from lower interest rates, the economy is teetering towards a recession. Economists now see the inflation rate rising above 4%.

From the Release: "Consumer Prices Index (CPI) annual inflation - the Government's target measure - was 3.8 per cent in June, up from 3.3 per cent in May.

The largest upward pressure came from food and non-alcoholic beverages. There were also large effects from meat, fruit and bread and cereals.

There were further large upward pressures from:

• transport costs, mainly due to the price of fuels and lubricants. The average price of petrol increased by 5.3 pence per litre between May and June this year, to stand at 117.6 pence, compared with a rise of 1.3 pence over the same period last year. There was a small effect from air transport where prices rose by more than last year."

For July
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

Current Situation: 17.0, forecast 32.9, pr. 37.6

Investor confidence in Germany fell to a record low in July, as a cumulation of factors, detailed below, most likely pushed German GDP into negative territory for the 2nd quarter. The ZEW index tries to predict how conditions will fare in the next six months. With the ECB increasing rates, weaker domestic and foreign demand, and continued turmoil in financial markets the outlook for growth is rapidly deteriorating. 

From the Release: "The ZEW Indicator of Economic Sentiment for Germany dropped significantly in July 2008. The indicator decreased by 11.5 points and now stands at minus 63.9 points after minus 52.4 points in the previous month. This is still well below its historical average of 28.8 points.

The low level of the economic sentiment indicator reflects increased world-wide risks for the economic activity. The high oil price, the strong euro, the crisis in the United States, the interest rate increase by the ECB and weak domestic consumer demand should negatively affect German companies in the next six months. The difficult business environment for German companies is indicated by the continued decline of incoming orders. Due to the strong decrease of incoming orders business expectations dropped remarkably for companies in the up to now strong machine constructing sector."

Advance Retail sales for June
Latest Release Provided by: US Department of Commerce

For June
Provided by: Bureau of Labor Statistics

PPI m/m excl. Food & Energy: 0.2%, forecast 0.3%, pr. 0.2%
Producer Price Index y/y: 9.2%,  forecast 8.7%, pr. 7.2%
PPI y/y excl. Food & Energy: forecast 3.2%, pr. 3.0%

Producer prices rose 1.8% in June, surprising forecasts on the upside, pushed up by higher energy and food prices. Excluding food and energy, prices were up 0.2%, lower than expectated. Energy prices were up 6% last month after climbing 4.9% in May, with gasoline prices jumping 9%. The annual pace of producer inflation hit 9.2%, the fastest rate since June 1981.

The data suggests inflation is alive and kicking in the US, and will present an extra challange to teh Federal Reserve. The FOMC would like to react to higher inflation with a rate hike, but weaker growth and very jittery stocks would react very negatively to such a development. The US economy has been shedding jobs all year, and the housing correction continues to struggle. 

For June
Provided by: Federal Reserve Bank of New York

From the Release: "The Empire State Manufacturing Survey indicates that manufacturing activity in New York State worsened for a third consecutive month in July. The general business conditions index increased slightly from last month’s level but, at -4.9, remained below zero. The new orders and shipments indexes both rose into positive territory, while the unfilled orders index was negative and drifted downward. The inventories index fell to its lowest level in a year. The prices paid and prices received indexes both reached record highs, and the employment indexes dipped below zero. The future general business conditions index fell sharply, reaching a level not seen since September 2001."

Provided by: Bank of Canada
Statement: Press Release

The Canadian Dollar reached parity against the US Dollar prior to its meeting. In its statement, part of which is reporduced below, the bank said it judges that its current level of 3% is "appropriate." Consumer inflation will continue to have upside risks as commodity prices continue to increase, but core inflation should remain "broadly in line with expectations."  

From the Release: "Three major developments are affecting the Canadian economy: the protracted weakness in the U.S. economy; ongoing turbulence in global financial markets; and sharp increases in many commodity prices. The first two developments are evolving roughly in line with expectations in the April Monetary Policy Report. However, commodity prices are continuing to outstrip earlier expectations. This has led to further increases in Canada's terms of trade and real national income, and has altered the outlook for global and domestic inflation.

Total CPI inflation over the next year is expected to be much higher than projected at the time of the April Report. Assuming energy prices follow current futures prices over the projection period, total CPI inflation is projected to rise temporarily above 4 per cent, peaking in the first quarter of 2009. As energy prices stabilize and with medium-term inflation expectations remaining well anchored, total inflation is then projected to converge to the core rate of inflation at the 2 per cent target in the second half of 2009. Core inflation is projected to remain well contained and broadly in line with earlier expectations, averaging close to 1.5 per cent through the third quarter of this year and then rising to 2 per cent in the second half of 2009.

The three major developments affecting the Canadian economy pose significant upside and downside risks to the Bank's base-case projection. Weighing the implications of these, the Bank views the risks to its base-case projection for inflation as balanced. Against this backdrop, the Bank judges that the current level of the target for the overnight rate remains appropriate."

For May (s.a.)
Provided by: US Department of Commerce

US Business Inventories y/y: 5.2%, pr. 5.4% (Apr), pr. 5.2% (Mar)

US business inventories grew at about half the rate expected in May. Firms may be reducing stocks as the weaker economy ahead may limit sales. By keeping inventories lean, firms will have to order more goods on demand, helping to increase manufacturing. Usually lower inventories mean retailers are selling their goods and will need to resupply, but conditions here may be different as it may be a willing effort by firms to keep inventories low.

For May
Provided by: the Westpac and Melbourne Institute
Media Release: (PDF)

The WMI leading index was flat for the month of May, and is significantly lower on the year at 2.1% in May, down from the 2.6% in April and below the long term trend of 3.9%. The annual coincident index was 3.0%, also below the long term trend of 3.8%. The current state of the economy as tracked by the nine components of this leading index is comparable to that of the 1995/1996 period where domestic spending growth slowed from 6.5% in 1994 to 2.8% and 3.2% in 1995 and 1996 respectively. The slowdown is in-line with what the RBA is expecting. Bill Evans, Westpac Chief Economist noted:

"In short, the growth profile of the Leading Index is consistent with our view that spending growth in the Australian economy will slow substantially through 2008 and 2009. Furthermore that slowdown is broadly consistent with the RBA's own forecasts and indicates that it will not need to further raise interest rates in this cycle."

For May
Provided by: Federal Statistics Office (FSO)

The Swiss National Bank will may not have to lower rates later this year, as May's retail sales exceeded expectations. In May, consumers splurged on electronics and leisure goods. On the year,  gains were led by sales in clothing and shoes (+12.6% y/y) and food, tobacco and beverages (+11.6% y/y). As exports start to slow due to a global slowdown, domestic demand will be needed to support economic growth. This will allow the SNB to be more hawkish on inflation.

For June
Provided by: Office of National Statistics

Claimant Count Unempl. Rate: 2.6%, forecast 2.6%, pr. 2.6% (Rev from 2.5%)

The claimant count, the number of workers asking for unemployment benefits, rose by 15K in June. This is the largest jump since 1992, harking back to the last recession. The economic slowdown in the UK has caused claims for unemployment benefits to increase 5 months in a row. Losses were mainly based in construction as the housing market in the UK contracts and in financial companies catering to weaker consumer demand for loans and mortgages. The Bank of England is unable to bring relief in the form of lower rates as the UK battles high inflation.

From the Release: "The trend in the employment rate is increasing, the trend in the unemployment rate is flat and the trend in the inactivity rate is falling. There has been another increase in the number of people claiming Jobseeker's Allowance benefit. The number of job vacancies has fallen. Growth in average earnings, both excluding and including bonuses, has fallen.

The claimant count was 840,100 in June 2008, up 15,500 over the previous month but down 23,100 over the year. The claimant count has increased over the month in all regions of the UK."

Final Version for June
Provided by: EuroStat

For June
Provided by: Bureau of Labor Statistics
Impact: High

CPI ex. Food & Energy m/m: 0.3%, forecast 0.2%, pr. 0.2%
CPI y/y: 5.0%, forecast 4.5%, pr. 4.2 (May), 3.9% (Apr)
CPI ex Food & Energy y/y: 2.4%, forecast 2.3%, pr. 2.3%

Consumer inflation in the US soared in June. The 1.1% monthly increase was the 2nd largest in nearly 26 years (since June 1982). The increase in the annual rate of 5% was the highest rate since May 1991. Energy prices amounted for 2/3rds of price changes and along with the rise in food is filtering down into other sectors such as housing (0.5%), transportation (3.8%), and services (0.5%). With the Fed warning that inflation was likely to move "temporarily" higher, a jump in June may have been expected by official and may not shift expectations of the Fed holding rates in their next meeting. However, if upcoming reports are seen as reinforcing inflationary pressures then rate hike may be back on the table for sometime this year. The economy is facing "numerous difficulties" Bernanke testified yesterday, putting Fed members into a tough dilemma, as rate hikes to combat inflation will add extra pressure on housing, credit costs and other parts of the economy.

From the Release: " On a seasonally adjusted basis, the CPI-U advanced 1.1 percent in June, following a 0.6 percent increase in May. The index for energy rose sharply for the second straight month, increasing 6.6 percent in June following a 4.4 percent increase in May. The increase in the energy index accounted for around two-thirds of the overall increase in the all items index in June. The index for petroleum-based energy advanced 10.0 percent and the index for energy services rose 1.5 percent. The food index rose 0.8 percent in June after rising 0.3 percent in May. The index for food at home went up 1.0 percent in June, with indexes for four of the six major grocery store food groups sharply accelerating. The index for all items less food and energy increased 0.3 percent in June, following a 0.1 percent rise in April and a 0.2 percent increase in May. Larger increases in the indexes for shelter and for tobacco and smoking products and an upturn in the apparel index contributed to the larger increase."