Most currencies are gaining ground against the US dollar this morning, after president Trump’s attempts to shake up America’s healthcare system hit another roadblock.
Overnight, two senators declared they wouldn’t support Trump’s push to repeal Obamacare. So, with veteran lawmaker John McCain recovering from surgery, the Republicans simply don’t have the votes….especially as some senators fear that millions of Americans, especially with pre-existing conditions, would suffer if the Affordable Care Act was repealed.
This has hurt the dollar, as it undermines hopes that Trump could deliver tax reforms or a big new infrastructure spending programme.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The cost of living squeeze is one of the hottest topics in Britain today, thanks to the decline in the pound last year and the government’s public sector pay squeeze.
So the main event today is the latest inflation figures, due at 9.30am today. They’re all-but-certain to show that prices are rising faster than wages.
Economists predict that the Consumer Prices Index will hit 2.9% for June, matching May’s figure. That would mean that real wages are continuing to shrink, as basic pay is currently only growing by 2% per year.
Prices are being driven up by the slump in the pound last June, which makes imports much dearer. So today’s figures will also show the impact of Britain’s vote to leave the EU.
Samuel Tombs of Pantheon Economicspredicts that food prices drove inflation up last month:
Samuel Tombs (@samueltombs)
UK CPI inflation probably held steady at 2.9% in June. Yes, fuel prices fell back, but food inflation likely jumped in response to lower £: pic.twitter.com/oyWXLaSu4R
Inflation has surged over the Bank of England’s official target of 2% in recent months, as our economics editor Larry Elliott explains:
Inflation was running at 0.6% when the UK voted to leave the EU in June 2016 but it has risen subsequently as a result of higher oil prices and dearer imports caused by the 12% decline in the value of the pound over the past 12 months.
That has taken the annual inflation rate to its highest level in four years and close to the level where Mark Carney, the governor of the Bank of England, would be forced to write a letter to the chancellor, Philip Hammond, explaining why Threadneedle Street had failed to keep the annual increase in the cost of living to within one percentage point of the government’s 2% target.
Here’s Larry’s preview:
Michael (@therightarticle)
UK inflation figures will shine light on impact of pound’s Brexit slidehttps://t.co/xqEgBEVDwt
The ONS will also publish its latest house price index, which may show that prices rose at a slower pace in May.
And over at Winchester cathedral, the Bank of England is preparing to unveil the final design of its new polymer £10 note. We already know it will feature Jane Austen, 200 years after the author’s death.
The agenda:
9am BST: ECB survey of bank lending in the eurozone
9.30am BST: UK inflation report for June
9.30am BST: UK house price survey for May
10am BST: Germany’s ZEW Economic Sentiment Index
Afternoon: Bank of England unveils new Jane Austen £10 note
Bloomberg
