Market Overview August 2023

August 31 2023

Key News To Note

UK inflation and interest rates

Data released on 16 Aug shows that UK inflation has slowed to 6.8% in July compared to the 7.9% in the previous month. Lower gas and electricity costs were the main drivers behind the sharp decline in headline UK inflation to 6.9%. Core inflation (which excludes food and energy prices) stayed the same at an unchanged annual rate of 6.9%, therefore we are likely to see the BoE maintain monetary policy tightening, with the next rate hike of 25 basis points scheduled for 21 September 2023.

Oil continues to rise

With the rise of green technology, and the pandemic meaning that oil consumption had lowered, analysts had forecasted price decreases in oil, however the demand for oil has grown. The International Energy Agency (IEA) just revealed that the world consumed an average of 103 million barrels a day in June, a new all time record. Furthermore OPEC+'s been reducing supplies consistently to increase oil prices with predictions for more cuts to continue. This is concerning as we may have to account for another inflation surge, just when we are finally getting energy prices under control.

China's Economy

China’s economy did expand by 6.3% last quarter compared to a year ago, however the expectations were 7.3% considering that many Chinese cities were still in lockdown for most of 2022. Furthermore the Chinese economy grew by only 0.8% from this quarter compared to the quarter before, which is a massive decrease compared to the 2.2% they grew in the first three months of the year. The youth unemployment rate in China continues to rapidly increase and according to statistics, 20% of all 16-24year olds are unemployed, this has doubled from 2019 when it was 10%.

Key Data

Current Inflation Rates

UK: 6.80%

Eurozone: 5.30%

USA: 3.20%

China: -0.30%

Interest Rates

UK: 5.25%

Eurozone: 4.25%

USA: 5.50%

China: 3.55%