The UK’s CPI inflation dropped to 4.6% in October, the lowest level recorded in the last two years. The figure’s drop exceeded analysts’ expectations, with some economists noting that it has been the biggest fall since 1992. Despite the fact that inflation fell, the UK’s figures remain elevated when compared to the US and the eurozone. The British pound lost some ground against the US dollar as market analysts suggest that the Bank of England (BoE) could reevaluate its monetary policy plans.
 

US CPI Inflation Lower Than Expected In October

US inflation figures delivered a mild surprise as both headline and core CPI came in slightly lower than expected at 3.2% and 4.0% respectively. Commenting on the CPI data, ING economists wrote that “the Federal Reserve has got to be pretty happy with this and unsurprisingly, it has reinforced market expectations that the policy rate has peaked. Just 1.5bp of tightening is now priced by the January 2024 FOMC meeting with more than 90bp of rate cuts now anticipated by the end of next year.”
 

US Retail Sales October Report

Later today, the US Census Bureau will release data regarding retail sales during October. Economists anticipate a 0.3% drop on a month-to-month basis while retail sales excluding car sales may come in flat. The Fed’s board takes into consideration such reports when adjusting its monetary policy as they show how consumers react to rising interest rates etc.

Commenting on consumer prices, Commerzbank’s economists said that “US consumer prices surprisingly remained unchanged in October compared to the previous month. The year-on-year rate fell from 3.7% to 3.2%,” adding that the Fed is unlikely to proceed with one more interest rate hike.
 

UK Retail Sales Likely To Fall In October?

On Friday, it will be the Office for National Statistics (ONS) turn to reveal retail sales data for the month of October. Market analysts expect the report to show a significant drop of 1.5% on a yearly basis, resuming the negative momentum, while on a month-to-month basis, they forecast a 0.3% rise.

The BRC-KPMG Retail Sales Monitor (RSM), a monthly measure of UK retail sales performance said that during the August-October period, UK retail total sales increased by 2.5%, lower than the 3-month average growth of 3.1% and the 12-month average growth of 4.2%. BRC’s analysts suggested that “many households are also delaying their Christmas spending in the hopes they can grab a bargain in the upcoming Black Friday sales.”
 

China Retail Sales Surprise On The Upside

Good news regarding the Chinese economy’s condition came from the country’s statistics office as a report showed retail sales surging by 7.6% last month on a year-to-year basis, above the 7% growth forecast by a Reuters poll. Industrial production rose by 4.6% year-on-year in October, while market analysts had expected a 4.4% rise.

However, investments in the real estate sector dropped by 9.3%, 0.2% more than anticipated prompting the head of the statistics service to note that the sector is in a “transition period of adjustment.”

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