Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We’ve woken up to news that inflation has picked up in China and Germany, while oil prices are also climbing, adding to worries that mounting price pressures could prompt central banks to raise interest rates.
Inflation in Germany picked up to 4.5% in October from 4.1% in September, but is slightly below August’s 4.6% rate, according to the country’s statistics office Destatis.
A surge in energy prices was behind the rise, up 18.6% year on year and up for the fourth month in a row. Prices of heating oil doubled and motor fuels jumped 35% while prices of natural gas and electricity rose by 7.4% and 2.5% respectively. Food prices are also rising, up 4.4% in October, pushed higher by dearer dairy products and eggs, and bread and cereals.
Meanwhile, China’s inflation jumped to an annual rate of 1.5% in October from 0.7% in September, marking a 13-month high, official figures showed. The increase was driven by higher prices for food and fuel. Factory gate prices soared 13.5%, the fastest rate in 26 years, as coal prices soared amid a power crunch in China’s industrial heartland.
On the oil markets, Brent crude has risen by 0.6% to $85.31 a barrel while US light crude is at $84.46 a barrel, up 0.37%.
Shares in Asia have retreated, with Hong Kong’s Hang Seng down 0.3% while the Shanghai Composite Index lost 0.4%, recouping some of their earlier losses, and Japan’s Nikkei fell 0.6%.
European stock markets are set to open lower ahead of the latest US inflation data.
Out at lunchtime, US inflation figures for October are expected to show consumer prices galloping ahead at 5.8% year on year, a 30-year high, according to a Reuters poll of economists’ forecasts.
Michael Hewson, chief market analyst at CMC Markets UK, said:
With a number of Fed policymakers making louder noises about the need for rate hikes next year, a strong number here could well prompt a rebound in US [bond] yields which have declined quite sharply in the last week or so, with the 10-year down over 15bps from last week’s highs.
- 9am GMT: Italy industrial production for September
- 1.30pm GMT: US inflation for October (forecast: 5.8%)
- 1.30pm GMT: US jobless claims
- 1.30pm GMT: Bank of England policymaker Silvana Tenreyro speaks
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