Economy

More stories

  • 88 Shares159 Views

    in Economy

    FirstFT: Trump’s trade war rocks global markets

    by

    S$479 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

  • 163 Shares159 Views

    in Economy

    Euro zone inflation rises to hotter-than-expected 2.5% in January on energy price hike

    by

    Inflation in the euro zone unexpectedly rose to 2.5% according to flash data from statistics agency Eurostat.
    A Reuters poll of economist had forecast the print to come in at 2.4%, unchanged from December.
    Energy costs accelerated sharply, jumping 1.8% from a year earlier in January compared to a 0.1% rise in the previous month.

    A person buys products at a Mercadona store in Lisbon, Portugal, on January 25, 2025.
    Luis Boza | Nurphoto | Getty Images

    The euro zone inflation accelerated to a hotter-than-expected 2.5% in January on an annual basis as energy costs jumped, flash data from statistics agency Eurostat showed Monday.
    Economists polled by Reuters had expected the January inflation print to come in at 2.4%, unchanged from December.

    So-called core inflation, which strips out food, energy, alcohol and tobacco prices, came in at 2.7% in January and has remained unchanged since September. The closely watched services inflation print meanwhile inched lower to 3.9% in January from 4% in December.
    Energy costs however jumped, rising 1.8% from a year earlier. This was up sharply from December’s 0.1% increase.
    Both energy prices and core inflation came in higher than anticipated, while the dip in services inflation was smaller than hoped for, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics said in a note on Monday.
    “Services inflation has been stuck around 4% for over a year,” he pointed out, noting that it was difficult to predict when it would ease.
    Headline inflation in the euro zone hit a low of 1.7% in September, but has since re-accelerated as base effects from lower energy prices have faded. The European Central Bank last week said disinflation “is well on track.”

    “Inflation has continued to develop broadly in line with the staff projections and is set to return to the Governing Council’s 2% medium-term target in the course of this year,” the bank added. “Most measures of underlying inflation suggest that inflation will settle at around the target on a sustained basis.”
    The ECB on Thursday cut interest rates by 25 basis points, bringing the key deposit facility rate to 2.75%. Further rate reductions are expected from the ECB throughout the year.
    Capital Economics’ Allen-Reynolds said that the latest inflation data “won’t change ECB policymakers’ minds about the likely near-term path for interest rates.”
    “The fact that services inflation remained high will mean that they will prefer to loosen policy in small steps,” he said.
    Inflation is likely to reach close to the 2% ECB target by the summer and could even fall lower later in the year, Allen-Reynolds estimated. He added that the net effect of potential tariffs imposed on goods imported to the U.S. from the EU — along with possible retaliatory duties from the European Commission — will likely be small.
    Bert Colijn, Netherlands chief economist at ING expressed more caution about the impact of such tariffs.
    “Retaliatory tariffs would add to inflation again as tariffs usually result in higher consumer prices,” he said Monday, adding that this meant inflationary risks “have far from fully abated.”
    “With inflationary risks still prevalent and uncertainty increasing, the question is how low the ECB can push rates to give the economy more breathing room,” Colijn said.
    The Monday data comes after several key euro zone economies, including France and Germany, last week reported their latest consumer price index data. The annual rate hit 1.8% in France and 2.8% in Germany, according to preliminary data from the country’s statistics agencies. The figures are harmonized across the euro zone for comparability.  More

  • 88 Shares129 Views

    in Economy

    Eurozone inflation rises to 2.5% in January

    by

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Eurozone inflation unexpectedly ticked up in January to stay above the European Central Bank’s medium-term 2 per cent target for the third month in a row, but the rise was not expected to alter policymakers’ plan to continue lowering interest rates.The bloc’s statistical office Eurostat reported on Monday that consumer prices in January were 2.5 per cent higher than a year ago, above analysts’ expectations of a 2.4 per cent rise, and up from 2.4 per cent in December. However, the recent months of higher inflation — the figure was 1.7 per cent in September — have largely been driven by energy prices that detracted from headline inflation. The acceleration from September is not expected to influence the direction of monetary policy because inflation over the past few months has still been softer than the ECB had forecast.The inflation numbers comes as US President Donald Trump announced an executive order imposing 25 per cent tariffs on Canadian and Mexican goods starting on Tuesday, though Canadian energy products are to be subject to a 10 per cent levy. He also imposed an additional 10 per cent tariff on goods from China.Trump said a 10 per cent levy on EU goods would “definitely happen”. Economists warn that a US tariff at that level on Eurozone imports and wider economic uncertainty could hit growth in the currency bloc by up to 0.5 percentage points within a year.EU leaders have vowed to retaliate against possible tariffs imposed on the bloc. But Bert Colijn, economist at ING, warned that retaliatory tariffs from the EU would fuel inflation because tariffs usually resulted in higher consumer prices. “With inflationary risks still prevalent and uncertainty increasing, the question is how low the ECB can push rates to give the economy more breathing room,” he added.Services sector inflation was still significantly above the ECB’s target at 3.9 per cent in January, but the central bank is confident it will come down this year as a result of easing wage pressures. Core inflation, which strips out volatile food and energy prices, was 2.7 per cent, unchanged from December and above analysts’ expectations of a 2.6 per cent rate. “January’s inflation data won’t change ECB policymakers’ minds about the likely near-term path for interest rates,” said Jack Allen-Reynolds, economist at the consultancy Capital Economics. “The fact that services inflation remained high will mean that they will prefer to loosen policy in small steps.”The central bank last week lowered interest rates for the fifth time since June by a quarter point to 2.75 per cent, reflecting confidence that inflation will come down to its 2 per cent target over the course of the year. Annual price rises hit a peak of 10.6 per cent in late 2022 following a surge in energy costs. “The disinflation process is well on track,” ECB president Christine Lagarde stressed last week, strongly hinting that further rate cuts were likely.“We know the direction of travel,” Lagarde said after Thursday’s decision, suggesting it was downwards, adding that the speed, timing and magnitude of future rate moves were going to be decided meeting by meeting. Official data published last week showed that the Eurozone economy registered no growth in the final three months of 2024, marking a sharp slowdown from the 0.4 per cent growth in the previous three months.  German GDP contracted 0.2 per cent in the final three months of 2024 compared with the previous quarter, while France’s economy unexpectedly shrank 0.1 per cent. Output was flat in Italy. More

  • 138 Shares129 Views

    in Economy

    Panama Canal Fees Have Become a Flashpoint. Here’s Why They’ve Risen.

    by

    President Trump says the canal authority is overcharging. Recent increases are attributed in part to drought, maintenance investments and demand.The cost of using the Panama Canal has risen in recent years — excessively so, President Trump has asserted. The canal operator says droughts, investments in upgrades and sheer demand are among the reasons.But if Mr. Trump wrests lower canal fees out of Panama, American consumers may not feel much difference, because canal costs make up only a small part of the retail cost of most goods. One analysis concludes that going through the canal adds 10 cents to the cost of a coffee maker.Panama Canal shipping fees were not a big issue until Mr. Trump raised the matter last year.As well as highlighting the costs of using the canal, American politicians have security concerns. They point out that China has made big investments in Panama’s infrastructure and that a Hong Kong company operates ports at both the Atlantic and Pacific ends of the canal. Secretary of State Marco Rubio, in a visit to Panama on Sunday, appeared to escalate those security concerns with Panama’s leader.China has no role in operating the canal, a job done by the Panama Canal Authority, a Panamanian agency. The United States built the canal in the early 20th century, mostly with laborers from the Caribbean, and ceded it to Panama in 1999 on condition that it be neutral.Mr. Trump has said that move, under a 1978 treaty, was a blunder by the United States, and he has refused to rule out military force to retake the waterway. In response, President José Raúl Mulino of Panama declared recently, “The canal is and will continue to be Panama’s.” He reiterated that on Sunday after meeting with Mr. Rubio: “There is no question that the canal is operated by Panama and will continue to be so.”The canal is crucial for the U.S. economy because it permits a shorter route between the East Coast and Asia than traveling across the Atlantic and Indian Oceans. Forty percent of United States container traffic and large amounts of U.S. energy exports travel through the canal on vessels paying tolls and other fees to use it.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More