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Date published:
27 May 2020
2 mins
Continued signs of lower global inflation as energy prices remain under pressure
- UK inflation fell to a 3-year low in April, as headline CPI fell from 1.5% to 0.8% on an annual basis. Petrol prices fell more than was expected over the month, with overall energy prices down 9.3% in April. Clothing and footwear prices fell 3% over the month as retailers offered lower prices to encourage online spending. The mortgage interest component held up despite slashed interest rates, whilst recreational goods (computer games consoles, software) and food and alcohol prices saw another month of increasing prices
- Canadian CPI declined 0.2% on an annualised basis in April, after increasing 0.9% in March. Gasoline prices drove much of the decline, -39.3% over the month (March +21.2%), and clothing prices were down -4.1%. Food, household products and alcohol prices increased at a faster pace, up 3.4%, +0.3% and +0.5% respectively
Flash PMIs rebound in April but still extremely depressed
- UK flash PMIs were better than expected in May, although still signalling further contraction to come. The composite reading was 28.9 (April: 13.8, consensus: 25.7), services rose to 27.8 (April: 13.4, consensus: 24.0) and manufacturing read 40.6 (April: 32.6, consensus: 37.2). Price indicators continued to look weaker, whilst the business expectations index was well above 50, showing signs of optimism for a rebound in the coming months
- The eurozone composite read 30.5 in May, recovering from its record low in April (13.6, consensus: 25.0). The flash manufacturing estimate read 39.5 (April: 33.4) and services remained weak at 28.7 (April 12.0). Whilst the direction of change over the month was positive, this still indicates unprecedented levels of contraction not seen before COVID-19. Among the largest economies, the German composite read 31.4 (April: 17.4) and the French composite read 30.5 (April: 11.1), with services indicating the largest expected contractions in both regions (31.4 and 29.4 respectively)
Stocks rally as lockdown measures relaxed
- Global equities were up some 2-4% (the Hang Seng was a notable exception as anti-China protests resumed in Hong Kong), helped along by the 6.5% rally in the US West Texas Intermediate crude marker. Gold and the DXY US dollar index were little changed over the week