US inflation rose more than anticipated last month, driven by higher egg and energy prices, which increased the cost of living for Americans. Inflation reached three per cent in January, the highest rate in six months, surpassing the 2.9 per cent forecast by economists.
Economists expected a relatively uneventful report with minimal changes from December’s data. However, the January report showed significant increases across various sectors, an unwelcome surprise at a time when the cost of living remains a concern.
The Federal Reserve aims to see inflation slow, and uncertainty looms over the impact of President Donald Trump’s heavy-handed tariffs and other policies that could affect prices. Trump, who was elected on promises to reduce prices for inflation-weary consumers, faces challenges as high inflation could jeopardise his administration’s agenda, including tax cuts that might overstimulate a healthy economy, and mass deportations of undocumented immigrants, potentially leading to labour shortages and increased business costs.
Meanwhile, the UK economy unexpectedly grew in Q4. Official figures indicate that Britain’s economy unexpectedly picked up in the last quarter of 2024, alleviating some pressure on Chancellor Rachel Reeves, after a stagnant summer.
According to data released last Thursday by the Office for National Statistics, the UK’s gross domestic product (GDP) grew by 0.1 per cent in the fourth quarter, following no growth in the prior quarter.
On an annual basis, the UK’s economy expanded by 1.4 per cent, an increase from the revised 1.0 per cent growth in the preceding three months. On a monthly basis, GDP increased by 0.4 per cent in December, an improvement from the 0.1 per cent growth reported in November.
Additionally, the visible trade gap narrowed to £17.4 billion in December from £18.9 billion in November, and the total trade deficit, which includes goods and services, decreased significantly to £2.8 billion from £4.4 billion.
Finally, eurozone investor confidence improved in February. Investor sentiment in the euro area reached a seven-month high in February, driven by improved economic expectations despite ongoing tariff threats, results of the monthly survey by the behavioural research institute Sentix showed on Monday.
The Eurozone Sentix Investor Confidence Index improved to -12.7 in February from -17.7 in January. The Current Situation gauge for the euro area also improved, climbing to -25.5 in February from -29.5 in January.
“The economy in the eurozone is trying to emerge from the crisis. Although the situation values of the ‘first mover’ among the economic indicators are still at -12.7 points, an improvement of four points is pointing in the right direction. The expectation values in particular are encouraging, suggesting that a little more confidence is in order,” the report highlighted.
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