Inflation falls in China but not elsewhere

It does look like the Chinese economy is beginning to cool. From Bloomberg:

China's inflation cooled to the slowest pace in 10 months, giving the government more room to restrain the yuan's advance and bolster economic growth.

Consumer prices rose 6.3 percent in July from a year earlier as food costs eased, the statistics bureau said today, after a 7.1 percent gain in June. That was below the 6.5 percent median estimate of 17 economists surveyed by Bloomberg News.

It was a similar story for house prices in China, which rose just 7.0 percent in July, the sixth consecutive month of lower growth rate.

Elsewhere, though, slower growth has not dented inflation.

In Japan, industrial output for June has been revised to a 2.2 percent fall from the initial reading of a 2.0 percent fall and the consumer sentiment index in July fell to the lowest since the government began compiling the figure. However, Japan's wholesale inflation rate accelerated to 7.1 percent in July, a 27-year high.

Inflation accelerated in the UK too in July. Reuters reports:

Inflation shot up in July to more than twice the central bank's target, dousing expectations of interest rate cuts any time soon despite new evidence of sliding house prices and waning consumer demand.

The 4.4 percent annual inflation rate was a record for the 11-year-old series, as was the 0.6 percentage point jump in the price measure from June which took financial markets by surprise. Economists had forecast a rise to 4.1 percent.

However, don't expect a rate hike from the BoE to restrain inflation.

Figures out earlier on Tuesday from the Royal Institution of Chartered Surveyors showed house prices falling sharply and the average number of sales per respondent falling to its lowest level in at least 30 years.

A separate report from the British Retail Consortium showed sales falling 0.9 percent on a year ago in July when measured on a like-for-like basis as consumers cut back on non-essentials.

Inflation in France in July, though, came in at 4.0 percent, unchanged from June.

While a slowing global economy should eventually pull inflation down, it may take a while. Certainly, there was little evidence of slower global growth in the US trade deficit for June, which narrowed on the back of a 4 percent surge in exports.