US inflation eased slightly in July, according to official data, potentially removing some pressure off the Federal Reserve from raising interest rates as sharply as many analysts have been predicting, in order to bring inflation under control.

According to a report issued on Wednesday by the US Bureau of Labour Statistics, consumer prices rose by 8.5 per cent in July compared with a year earlier. That was down from a 9.1 per cent year-over-year jump in June. On a monthly basis, prices were unchanged compared to June, the smallest increase in more than the last two years.

Neel Kashkari, head of the Minneapolis Fed Bank, said that while the latest data is welcome, “this is just the first hint that maybe inflation is starting to move in the right direction”.

In the meantime, investor morale in the eurozone rose slightly in August over July, with the rise being too small to dispel fears of a recession, a survey showed on Monday. The Eurozone Sentix Investor Confidence index came in at -25.2 in August from -26.4 in May compared with an expectation of -24.7. The current situation was up very slightly at -16.3 in August after falling to -16.5 in July, which was its lowest since March 2021.

At the same time, the expectations index rose slightly to -33.8, though close to its July level, the lowest since December 2008. Despite the increase, a recession in the 19 countries that share the euro currency still seems very likely, Sentix said.

Finally, in the UK, Britain’s July heatwave boosted sales in shops and spending on “staycations” as the higher cost of living forced buyers to cut back on travel outside the country, a report showed. The British Retail Consortium (BRC) said on Tuesday that retail sales increased 2.3 per cent in July, ending three consecutive months of decline.

One has to keep in mind that the figures are not adjusted for inflation, which the BRC said was around the highest since 2008, with the cost-of-living crisis continuing to hit UK households. Helen Dickinson, chief executive of the British Retail Consortium, said: “Sales improved in July as the heatwave boosted sales of hot weather essentials.”

This report was compiled by Bank of Valletta for general information purposes only.