The Federal Reserve’s latest Beige Book, which gathers anecdotal information on the current state of the US economy, confirmed that it was growing faster through early July, but the recovery is being restrained by widespread shortages of labour and supplies.

Prices were also strong, rising “at an above-average pace,” the Fed said, with its business contacts apparently uncertain that higher inflation would fade soon.

Overall, the US economy was described as displaying “moderate to robust growth”, marking the report’s most optimistic overall characterisation of the economy since early 2018. However, it noted a heightened sense of concern among businesses that the supply chain disruptions that have become a feature of the economy’s reopening from COVID-19-related shutdowns would persist for longer than officials had predicted.

Meanwhile, inflation in Britain surged further above the Bank of England’s (BOE) target in June to reach 2.5 per cent, its highest reading since August 2018, increasing speculation that the BOE will have to consider sooner whether to taper its massive stimulus programme.

Prices for food, fuel, second-hand cars, clothing and footwear rose as the economy bounced back from its lockdown slump, the Office for National Statistics said.

Economists had predicted headline inflation to inch up to 2.2 per cent from May’s 2.1 per cent, and comes on the heels of a report that showed US inflation hitting its highest in 13 years at 5.4 per cent.

Core inflation, that excludes energy, food, alcoholic beverages and tobacco, advanced to 2.3 per cent in June from two per cent in May.

Finally, China reported second-quarter GDP growth that came in slightly below expectations.

The country’s GDP increased by 7.9 per cent in the second quarter from the same quarter last year, the National Bureau of Statistics said on Thursday. That fell short of economists’ average estimate of 8.1 per cent growth for the April to June period.

Second-quarter GDP rose by 1.3 per cent from the first quarter, faster than the 0.6 per cent pace seen between the first quarter of this year and fourth quarter of 2020.

However, the latest quarterly increase was still slower than the 2.6 per cent pace of the fourth quarter.

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

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