US inflation unexpectedly stays at 2.7%
US inflation unexpectedly held at 2.7% final month, confounding expectations of an uptick, whereas a core measure got here in greater than anticipated.
The annual headline fee of inflation was anticipated to rise barely to 2.8%.
Inventory market futures gained after the figures had been launched. Spot gold rose by 0.2% to $3,351 an oz..
Nevertheless, the core fee of inflation, stripping out unstable meals and power prices, was barely greater than anticipated at 3.1%, in line with the US Bureau of Labor Statistics.
This complicates the Federal Reserve’s coverage determination. It had been anticipated to decrease charges in September, and the info is unlikely to alter that expectation.
Key occasions
Richard Flax, chief funding officer on the European fund supervisor Moneyfarm, stated:
The most recent inflation launch was kind of according to analyst expectations – with headline inflation marginally under expectations and core inflation marginally greater. Headline inflation got here in at 2.7% in July flat from June and barely decrease than expectations. On month-on-month phrases, headline inflation rose by 0.2% in July, at a barely decrease progress fee than the 0.3% within the earlier month.
Excluding the unstable elements of meals and power, core CPI rose 3.1% 12 months on 12 months, barely greater than anticipated. In comparison with June, core inflation climbed by 0.3% – the largest month-to-month achieve for the reason that starting of the 12 months.
Will increase in providers inflation led the general index greater, pushed by medical and transportation bills. With inflation above the Feds goal and indicators of slower financial progress, central bankers have an ungainly determination to make at their subsequent assembly in September. Regardless of that, monetary markets suggest a excessive chance that the Federal Reserve will reduce charges in September and on stability we expect this report shouldn’t considerably shift these expectations.
Meals costs within the US rose by 2.9% year-on-year final month, the info confirmed, whereas power costs slipped by 1.6%.
Up to now, there are few indicators of commerce tariffs pushing up inflation, though core inflation rose to the best annual fee since February.
US headline client inflation was regular in July, rising 2.7% vs the year-ago degree, however core CPI (a extra dependable measure of the development) ticked as much as 3.1%, the best since Feb. Nonetheless no signal of tariff inflation correct, however core CPI’s uptick could possibly be an indication of issues to return: pic.twitter.com/CZcJP0lNKt
— James Picerno (@jpicerno) August 12, 2025
US inflation unexpectedly stays at 2.7%
US inflation unexpectedly held at 2.7% final month, confounding expectations of an uptick, whereas a core measure got here in greater than anticipated.
The annual headline fee of inflation was anticipated to rise barely to 2.8%.
Inventory market futures gained after the figures had been launched. Spot gold rose by 0.2% to $3,351 an oz..
Nevertheless, the core fee of inflation, stripping out unstable meals and power prices, was barely greater than anticipated at 3.1%, in line with the US Bureau of Labor Statistics.
This complicates the Federal Reserve’s coverage determination. It had been anticipated to decrease charges in September, and the info is unlikely to alter that expectation.
The oil cartel Opec has lifted its forecast for international oil demand subsequent 12 months, because it trimmed its forecast for provide will increase from the US and different producers exterior the broader Opec+ group, which incorporates Russia.
World oil demand is estimated to rise by 1.38m barrels per day (bpd) in 2026, the Organisation of the Petroleum Exporting Nations stated in its month-to-month report, up 100,000 bpd from its earlier forecast. Its estimate for this 12 months is unchanged.
Rising demand and a drop in provide progress from exterior the oil cartel would make it simpler for the Opec+ group to pump extra oil to claw again market share, after years of cuts geared toward supporting the market and costs.
In July, Opec+ raised oil ouput by 335,000 bpd.
US inventory futures are flat forward of US inflation figures, out in 40 minutes, that could possibly be key to the Federal Reserve’s subsequent curiosity determination.
Economists expect a slight uptick within the headline inflation fee to 2.8% in July, from 2.7% the month earlier than.
The affect of recent commerce tariffs and uncertainty over future commerce coverage below Donald Trump have difficult the Fed’s determination on fee cuts.
There’s some aid in markets that the US and China have prolonged their tariff truce for one more 90 days till 10 November, staving off triple-digit will increase in one another import duties.
Over right here, the FTSE 100 index is flat at 9,135 whereas the German market is down 0.5% and the French bourse has added 0.1%.
The Liberal Democrat MP for Witney, Charlie Maynard, stated:
The Liberal Democrats have been warning the federal government for months that the one choice to get a grip on Thames Water at this level is to place it into Particular Administration.
Thames Water has been allowed to proceed to flounder, whereas clients are made to pay sky excessive curiosity funds on the corporate’s billions of kilos of debt.
Particular Administration will permit debt to be written down so extra money could be spent on cleansing up the sewage in our lakes and rivers. The ultimate whistle must be blown on Thames Water and we want a brand new, succesful regulator in place as quickly as doable.
Right here is our full story on Thames Water:
UK ministers have appointed insolvency advisers to make contingency plans for the potential collapse of Thames Water.
The corporate, which provides 16 million clients, has been racing to tug collectively a deal to keep away from monetary collapse.
The appointment signifies that FTI is the frontrunner to behave as administrator if the federal government enacted an SAR, though a courtroom would in the end approve such a step.
The federal government has been attempting to keep away from such an final result, with the Treasury threatening {that a} potential £4bn invoice from the SAR could be forced on to Steve Reed’s setting division. This course of would make sure that the faucets stayed on for purchasers however would heap instant prices on to the federal government.
Nevertheless, the federal government’s Water (Particular Measures) Act comprises a provision for SAR prices to be recouped from buyer payments additional down the road.
Gold costs flat; Swiss metals group needs formal US dedication on gold tariffs
In monetary markets, spot gold costs are flat after dropping practically 1.6% on Monday, when Donald Trump introduced there can be no US tariffs on imported gold bars.
“Gold won’t be Tariffed!” the US president stated on his social media account, with out giving additional particulars.
Spot edged as much as $3,352 an oz. earlier. On Friday, gold futures hit a record high after a ruling on the US customs and border protection service’s website suggested that one-kilo bars of gold could be subject to new US import tariffs. This could have been particularly damaging for Switzerland, a significant refining and transit hub for gold. Trump just lately imposed a 39% tariff on Swiss exports to the US.
The Swiss inventory alternate can be flat right this moment.
However, the top of the Swiss valuable metals affiliation ASFCMP stated solely a proper determination will present certainty. Its president Christoph Wild stated:
President Trump’s assertion is an encouraging sign for commerce stability.
Nevertheless, solely a proper and binding determination will present the understanding the gold sector and its companions require.
Investor morale worsens in Germany
Investor morale in Germany has worsened markedly, as monetary market specialists had been dissatisfied by the latest commerce deal between the EU and the US, in line with a carefully watched survey.
After rising for a number of months, the Centre for European financial analysis (ZEW)‘s indicator of financial sentiment in Germany fell by 18 factors to 34.7 factors. The evaluation of the present financial scenario additionally declined, by 9.1 factors.
ZEW president, Professor Achim Wambach, stated:
The ZEW indicator experiences a considerable decline, additionally as a result of poor efficiency of the German economic system within the second quarter of 2025. The outlook has worsened specifically for the chemical and pharmaceutical industries. The mechanical engineering and metallic sectors in addition to the automotive business are additionally severely affected.
Though preliminary progress estimates for the eurozone had been higher than these for Germany within the second quarter, they had been revised decrease for the at present and are at present at 25.1 factors – 11.0 factors under July’s studying. The evaluation of the present financial scenario additionally worsened, by 7 factors.
UK ministers appoint insolvency advisers for Thames Water collapse ‘contingency plans’
UK ministers have lined up insolvency practitioners to arrange for the potential collapse of Thames Water, Britain’s largest water firm.
Steve Reed, the setting secretary, has signed off the appointment of FTI Consulting to advise on contingency plans for Thames Water to be positioned right into a Particular Administration regime (SAR), in information first reported by Sky Information.
This places FTI Consulting because the frontrunner to behave as the corporate’s administrator if it fails to safe a non-public sector bailout – though such an appointment would happen in courtroom.
Hannah Slaughter, a senior economist on the Decision Basis thinktank, stated that whereas the unemployment fee remained regular at 4.7%, it was up from 4.2% a 12 months in the past and three.9% earlier than the pandemic.
She stated:
The UK’s post-pandemic labour market was purple sizzling. However that interval is formally over – the labour market is free and getting looser, having shed 165,000 payrolled jobs over the previous eight months.”
She added that the job losses had been concentrated in low-paying sectors similar to retail and hospitality. She stated it meant the federal government was more likely to push again in opposition to campaigns for an enormous improve to the minimal wage subsequent 12 months, fearing it might result in even bigger job losses.
Right here is the federal government’s, and unions’ response to the newest job market information information from the ONS.
Employment minister Alison McGovern stated:
In the present day’s figures present actual progress with financial inactivity down, and 384,000 jobs added to the economic system since final summer time, placing extra money in individuals’s pockets.
We’re decided to see unemployment fall that’s why we’re centered on getting individuals into good jobs by becoming a member of up work, well being and expertise assist and remodeling jobcentres to give attention to real assist not ticking packing containers.
Paul Nowak, normal secretary of the TUC which includes 48 commerce unions and represents 5.5 million staff, stated:
It’s welcome that wages proceed to develop and that employment charges are nonetheless rising.
Nevertheless, years of Tory cuts and underinvestment have left large challenges within the jobs market – together with continued progress in the usage of insecure zero hours contracts.
The federal government is elevating nationwide funding, repairing public providers, and bettering the assist individuals have to get into work. That is placing Britain on the highway to restoration.
However extra is required. Daring motion should proceed to match the scale of the issues we face. This could embrace improved assist for disabled staff and a complete youth assure.
On the newest zero-hours contracts figures, which present greater than 1,000,000 staff employed on a zero-hours contract, he added:
There are nonetheless far too many individuals trapped on zero-hours contracts, uncertain of how a lot they’ll make from one week to the subsequent.
However Tory and Lib Dem Lords have been voting to dam new rights for staff to a correct contract with common hours. The sight of hereditary Friends voting in opposition to staff’ rights belongs in one other century.
Working individuals want the Employment Rights Invoice delivered in full.
Excessive river temperatures power French energy plant to scale back manufacturing
French nuclear energy stations are struggling within the heatwave – after a swarm of jellyfish pressured the shutdown of the Gravelines energy plant on the North Coastline, excessive river temperatures in different elements of the nation imply that one other plant should cut back output.
Energy manufacturing at France’s Bugey 3 nuclear reactor is predicted to be decreased by 500 megawatts (MW) on Wednesday, as excessive river temperatures cut back the plant’s capability to soak up cooling water.
A heatwave throughout France has led to a number of warnings of energy reductions at a variety of nuclear vegetation, notably on the Rhône river within the east and the Garonne within the west.
The excessive water temperature warnings for the Saint Alban plant – down river from the Bugey web site – and the Golfech web site within the west had been moved to Thursday, however restrictions haven’t but been issued.
Nuclear energy accounts for about 70% of complete French energy consumption yearly, however August is the principle vacation season, lowering demand for electrical energy.
In the present day,
The Recruitment and Employment Confederation’s deputy chief govt Kate Shoesmith stated:
The labour market stays difficult, with many companies sustaining a cautious method to hiring. But when we’re to harness the optimism companies inform us they’ve for future recruitment later this 12 months, we’ll want the autumn price range to supply employers a bit extra bandwidth on prices.
The resilience of the UK labour market is obvious in right this moment’s official statistics, with the variety of individuals in work barely up and unemployment solely barely greater than within the earlier quarter. Tackling financial inactivity, which noticed a fall over each the quarter and the 12 months, stays the one biggest problem for this authorities if they’re to ever obtain their objective of 80% employment.
Our labour market image is combined. Building and different blue-collar industries are exhibiting a mild return to hiring, which is commonly a powerful indicator for the broader economic system, alongside sustained demand for engineering expertise. However hospitality and retail noticed a sluggish begin to the summer time amid price headwinds.
With pay progress steadying total after a unstable few years – prompted partially by inflating-busting rises in nationwide minimal wage charges – now’s the time for pragmatism from the Low Pay Fee earlier than they make any additional choices on pay charges, and because the Financial institution of England continues to watch rates of interest carefully. Enterprise can not afford additional price rises.
The breakdown of the ONS data exhibits that the wholesale, retail, accommodations and eating places sector posted the strongest annual common progress fee (excluding bonuses), at 6.8%, in April to June.
The finance and enterprise providers sector, which pay out extra bonuses, had the bottom annual common progress fee, at 3.1%.
Common annual pay progress was 5.7% for the general public sector, and 4.8% for the non-public sector.
Turning to the UK labour market: it’s clearly shedding momentum, with employers reducing again on bonuses and hiring.
Suren Thiru, economics director on the Institute of Chartered Accountants in England and Wales, stated:
These figures sign rising turmoil within the UK labour market, with April’s leap in employment prices and a flagging economic system pushing extra companies to actively reduce headcount and cap pay awards.
Wage progress is more likely to weaken over the course of the 12 months as softening financial circumstances, rising redundancies and elevated staffing prices more and more hinder pay settlements.
The UK jobs market is going through extra ache within the coming months with greater labour prices more likely to raise unemployment reasonably greater, notably given rising considerations over extra tax rises on this Autumn’s Price range.
Whereas these disheartening figures will reassure rate-setters that final week’s coverage loosening was the proper name, the tempo at which the labour market is at present cooling is unlikely to be enough to immediate one other fee reduce in September.
The Bank of England cut interest rates for the fifth time in a 12 months final Thursday amid considerations over a weakening economic system, however warned that rising meals costs might drive inflation to 4% (the central financial institution is charged with protecting inflation at 2%).
Oil costs are rising because the prolonged tariff truce between the US and China eased worries that an escalation of their commerce battle would disrupt the worldwide economic system.
Brent crude futures gained 0.4% to $66.90 a barrel, whereas US West Texas Intermediate crude futures additionally rose by 0.4% to $64.20.
Inventory markets within the Asia-Pacific area largely rose, with Japan’s Nikkei index hitting a document closing excessive and ending 2.15% greater.
Australian shares prolonged their beneficial properties for a second day, and in addition reached a brand new intra-day all-time excessive. China is the principle export vacation spot for Australian items.
Introduction: US and China prolong 90-day tariff truce; UK jobless fee regular, vacancies fall
Good morning, and welcome to our rolling protection of enterprise, the monetary markets and the world economic system.
The US and China have prolonged their truce on commerce tariffs for one more 90 days, staving off triple-digit duties on imports simply as US retailers begin stockpiling for the important thing end-of-year vacation season.
Donald Trump posted on his Reality Social platform that he signed the chief order for the extension, and that “all different parts of the Settlement will stay the identical”. Beijing’s Commerce Ministry introduced the extension of the tariff pause early on Tuesday.
Trump’s govt order said:
The USA continues to have discussions with the PRC [People’s Republic of China] to handle the dearth of commerce reciprocity in our financial relationship and our ensuing nationwide and financial safety considerations.
By these discussions, the PRC continues to take vital steps in the direction of remedying non-reciprocal commerce preparations and addressing the considerations of the US referring to financial and nationwide safety issues.
The tariff pause was on account of expire on Tuesday at 12:01am EDT. The extension till November might be welcomed by US retailers who are actually capable of purchase electronics, toys and different merchandise at decrease tariff charges forward of Christmas.
Trump had threatened tariffs on Chinese language items imports of as much as 145% whereas Chinese language duties on US items had been set to hit 125%.
“We’ll see what occurs,” the US president stated at a information convention on Monday, flagging what he referred to as his good relationship with Chinese language president Xi Jinping.
China stated the extension was “a measure to additional implement the vital consensus reached by the 2 heads of state throughout their 5 June name”.
The UK labour market continues to chill, in line with the newest official figures. Common pay progress within the UK held regular at 5% however wage progress slowed as soon as bonuses are included, whereas the unemployment fee stayed at 4.7% and vacancies fell once more.
The Workplace for Nationwide Statistics stated common wages, excluding bonuses, grew by 5% between April and June, the identical tempo as within the three months to Could, whereas complete pay progress together with bonuses slowed to 4.6% from 5%.
Vacancies fell by 44,000 between Could and July. The statistics workplace stated suggestions suggests “some companies will not be recruiting new staff or changing staff who’ve left”.
At lunchtime UK time, we’ll be getting the newest US inflation information.
The Agenda
