US Inflation released yesterday showed an unexpected rise in January with figures climbing to 3% to hit its highest level in six months. This unexpected rise comes one week after Donald Trump was suggesting interest rates not just in The US but globally need to come down and now evidently poses a challenge for him. The uptick in prices last month was spread across many different products and sectors, with Grocery prices climbing 0.5% and egg prices in particular rising by 15% due to shortages caused by Avian Flu.
Even when stripping out food and energy, inflation was still at 0.4% for the month which represented the fastest monthly growth since March 2024. Again, there seems to be a difference in thoughts between Donald Trump and The Federal Reserve, with the governing council reluctant to reduce rates any further whilst inflation is still proving sticky. Some market analysts now expect to see no further rate cuts at all in 2025.
This morning has seen the release of UK GDP figures for the final three months of 2024 and surprisingly the numbers suggest the economy grew ever so slightly by 0.1%. Economists had largely been expecting the economy to contract by 0.1%, but overperformance in Services and Manufacturing came to the rescue.
Although this slight growth will come as a relief to chancellor Rachel Reeves, there is still a small chance of a shallow recession due to the difference between contraction and growth being so small. A concerning outlook for The UK is also the fact that The Bank of England expect inflation to climb back up to 3.7% throughout 2025, which coupled with slow growth and high interest rates does not bode well for consumers.
GBP/EUR 1.1971 GBP/USD 1.2473 GBP/AED 4.5838
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GBP/NZD 2.2126 EUR/USD 1.0408 GBP/ZAR 23.0886