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Inflation in South Korea in March hit its highest level in ten years; U.S. trade deficit remains at record high in February — Macro Snapshot

RIYADH: South Korea’s consumer prices rose at their fastest pace in more than a decade in March as war in Ukraine fueled soaring energy and raw material costs, adding pressure on the central bank ahead of its rate decision meeting next week.

The consumer price index for March rose 4.1% from a year earlier, official data showed on Tuesday, the fastest rise since December 2011 and surpassing the 3.8% rise reported in a Reuters poll.

Core inflation, which excludes volatile food and energy costs, also jumped 2.9% from a year earlier, remaining at the pace seen in February. The sustained rise in commodity prices shows that soaring fuel and commodity prices are passing through to consumers.

Japanese household spending

Japanese household spending rose for a second consecutive year-on-year in February, helped by a flattering comparison to last year’s pandemic-induced sharp decline, but the consumer sector now faces headwinds increasing due to soaring prices.

Households cut spending from the previous month as the pandemic dampens, rapidly rising food and fuel prices and the coronavirus shut wallets, casting a shadow over the world’s third-largest economy.

In a sign of trouble for consumer confidence, real wage growth stagnated in February as global inflationary pressures weighed on household purchasing power.

“Prices will now outpace wage gains, so consumption will be on a slow trend,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Romania raises interest rates

Romania’s central bank raised its benchmark interest rate by half a percentage point to 3% on Tuesday and said inflation would rise more than expected as fuel and food prices beat a government program of inflation. energy support.

The bank raised its lending facility rate to 4% from 3.50% and its deposit rate to 2% from 1.5%, and said it would retain firm control over market liquidity.

All analysts polled by Reuters were expecting a rise on Tuesday, with the median forecast for the benchmark end-2022 rate at 4%.

Rising interest rates in Australia

Australia’s central bank on Tuesday opened the door to the first interest rate hike in more than a decade by abandoning its previous pledge to be “patient” on policy, a major surprise that sent the local dollar to highs. nine-month highs.

Concluding its April policy meeting, the Reserve Bank of Australia kept its cash rate at 0.1%, but noted that inflation had picked up and was likely to rise further, while unemployment had fallen. faster than expected at 4.0%.

“Over the coming months, important additional evidence will be made available to the Council on inflation and labor cost developments,” RBA Governor Philip Lowe said in a statement. communicated.

The service sector in Italy

Growth in Italy’s services sector slowed in March as war in Ukraine weighed on demand, a survey showed on Tuesday, in the latest sign of slowing momentum in the eurozone’s third-largest economy.

The S&P Global Purchasing Managers’ Index for services fell to 52.1 in March from 52.8 in February, while remaining above the 50 mark that separates growth from contraction.

The reading beat the median forecast of 51.5 in a Reuters survey of 14 analysts.

The sub-index for new business in the services sector stood at 52.6 in March compared to 52.9 in February.

Growth in France

The French services sector grew at a faster pace in March, according to a survey released on Tuesday, although business confidence in the outlook weakened due to inflation and uncertainty caused by the Russian invasion from Ukraine.

S&P Global said while French business activity benefited from the removal of COVID-19 health protocols in the country, its measure of business confidence fell to a 14-month low in March.

S&P Global said its Purchasing Managers’ Index for services rose from 55.5 in February to 57.4 points in March, exactly matching an earlier flash estimate.

Canada’s exports

Canada’s exports rose 2.8% in February to a record high, driven mainly by energy products, while imports rose 3.9% from the previous month, mainly metals, data showed. Statistics Canada released Tuesday.

The country’s trade surplus with the world narrowed to C$2.66 billion ($2.14 billion), slightly below analysts’ forecast of C$2.9 billion. But exports beat expectations at C$58.75 billion, with imports also beating at C$56.08 billion.

Energy exports rose 7.8% to a record high, accounting for more than two-thirds of the total increase, while exports of non-energy products rose 1.2%. In volume terms, exports increased by 0.6%.

US trade deficit

The US trade deficit barely budged from a record high in February, suggesting that trade remained a drag on economic growth in the first quarter.

The Commerce Department said Tuesday the trade deficit narrowed 0.1% to $89.2 billion in February. Data for December has been revised to show a shortfall of $89.2 billion, still a record high, instead of the previously reported $89.7 billion.

Economists polled by Reuters had forecast a deficit of $88.5 billion. Trade has detracted from gross domestic product growth for six consecutive quarters.

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