Paul Francis, Head of Investment Consulting at Alexander Forbes Consultants & Actuaries Limited rounds up last week’s key economic news:


UK inflation figures were released last week, with the Consumer Prices Index (CPI) and Retail Price Index (RPI) continuing to decline to 2.5% and 2.9%, respectively. The Office of National Statistics (ONS) announced it will consult on the calculation of RPI, which takes into account housing costs, following the Consumer Price Advisory Committee’s examination of the differences arising from variations in calculation methodology.

UK retail sales fell 0.2% over the month of August, with fewer consumers shopping on the internet during the Olympic Games impacting online sales. Similarly, average asking prices for homes in England and Wales fell 0.6%, according to Rightmove Plc, the property website.

The Bank of England’s Monetary Policy Committee minutes were released during the week, revealing members voted unanimously in favour of leaving the base rate and Asset Purchase Facility unchanged at 0.50% and £375bn, respectively. One member considered there to be a good case for additional easing, while several others indicated that further stimulus may be required.


Troika officials were in Greece last week trying to conclude the terms for the next tranche of Greek bailout funds. This is dependent on Greek coalition leaders reaching an agreement on the austerity package, which, so far, they have failed to do. Even if the austerity measures were to be passed, the conditions are still below Troika demands and may inhibit the funds being released. The Troika inspectors left Greece without completing their review, requiring a return visit in early October.

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Preliminary PMI data was released during the week in the US, China and the Eurozone. China’s manufacturing continued to slow for the 11th consecutive month, although data in the Eurozone still remains the weakest: recording 45.9, the lowest in three years. The US manufacturing sector is still seeing some modest growth. However, these data points were largely in line with consensus expectations and did not catalyse significant market moves.

The results of a bottom-up review of Spanish banks are due to be released this Thursday, while the Spanish government is also expected to present additional austerity measures. Either of these may result in calls for the federal government to request a full bailout package.

The US Treasury has indicated that domestic investors are purchasing treasuries at a faster rate than overseas investors for the first time since 2010. This is assisting government borrowing as the total of outstanding public debt rises above $16 trillion.

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