Here are some highlights of news items you might have missed today.
UK Inflation Slows, but Chances of Rate Rise Growing
Despite a dip in inflation in the U.K., British interest rates are likely to rise before next May, a member of the Bank of England’s policy-setting committee told the Times of London newspaper. And that member, David Miles, has been a strong advocate of stimulus policies in the past two years.
“I guess until very recently the expectation implied by the short end of the yield curve (was) that the first rise in interest rates might be April or May next year. Clearly there is the chance that the rise will be before that,” Miles was quoted as saying. “Consistently, growth has come in stronger. The longer that lasts, clearly one starts to change one’s view of how robust the recovery is and that will affect when you think is the right time to start normalizing policy.”
But rate discussions can still be complicated in the U.K. Just today, the national statistics office reported that British inflation had fallen to a 4 ½-year low, with consumer price inflation dipping to 1.5 percent in May from 1.8 in April, the lowest since late 2009. However, separate data showed that home prices had jumped 9.9 percent in April, the biggest annual rise since June 2010 and keeping alive fears of a bubble.
Band of England Governor Mark Carney said last week that rates might rise sooner than markets had previously expected. The Bank’s Monetary Policy Committee is due to release minutes from its June meeting tomorrow and could give a good indication on policy-makers’ thinking at this time.
Retailers to Help Consumers Compare Prices
Several major retailers, including Wal-Mart, Costco and Walgreens, have agreed to make it easier for U.S. consumers to keep the effects of inflation down on their budgets, allowing customers to compare prices online in a deal brokered by the New York Attorney General’s office.
The retailers will display prices by unit of measurement on their websites and mobile apps, a move officials say will help consumers more easily decipher the numbers and better determine values that can be masked because of different packaging and discounts.
Amazon has declined to join the initiative, the NYAG’s office said, according to a report by the New York Times.
Wal-Mart and Costco will display unit pricing on online stores by the end of 2014, while Walgreens, CVS, Drugstore.com and FreshDirect said they would do so by next March, the report said.
Germans’ Confidence in Their Economy Wanes
Back to Europe, an important survey on investor confidence in Germany showed a decline for the sixth month in a row, surprising many who had expected a rise.
The ZEW sentiment survey showed the indicator for economic expectations fell to 29.8 in June from 33.1 in May. The Wall Street Journal reported that analysts had forecast the figure would be 35.0. The survey consisted of 234 analysts and institutional investors.
Concerns about the crisis in Ukraine, emerging markets and China helped push down the indicator in recent months, the report said. Still, the survey said, it wasn’t panic time in the country. “The Germany economy is currently in very good shape, but further increases are becoming more difficult,” ZEW President Clemens Fuest said.
Surprise: Iraqi Oil Exports Set to Surge Despite Turmoil
Despite a violent and bloody civil war going on in other parts of the country, Iraq is poised to dramatically increase its oil exports, with most coming from its terminals in the quieter southern terminals on the Persian Gulf, Bloomberg reports.
Bloomberg, citing a preliminary loading plan that it has seen, said that exports of Basrah Light crude, the country’s main grade, could hit 2.8 million barrels a day next month. The figure would be an 11 percent rise from this year’s average.
“The only infrastructure that is currently producing and supplying international markets is in the south and will remain untouched,” said Kyle Stelma, managing director of Dubai-based Dunia Frontier Consultants. “They are systematically increasing production and export capacity, so, on average, we should keep seeing new monthly records being set.”
This will come as a relief to those worrying about the effect that a dramatic rise in oil prices would have on gasoline prices and the world economy. But, given the uncertainties in that country right now, there’s no guarantee that the plan will be fulfilled.
The Money and Markets Team