US PCE inflation slows more than expected

The US dollar has extended its decline, reaching its lowest level in five months

22 December 2023

Market close
  • The US dollar persists in its downward trend following the release of recent data

  • UK retail sales have surged, achieving their highest level in 22 months

  • Amidst escalating tensions in the Red Sea region, oil prices continue to rise

US PCE Inflation decelerates beyond forecasts

Recent data from the United States reveals that the Federal Reserve's Preferred Inflation Index, the Core Personal Consumption Expenditures (PCE) Price Index, grew less than anticipated. In November, the index saw a monthly increase of only 0.1%, falling short of the market's expectation of 0.2%. Year-over-year, the index rose to 3.2% in November, again below the forecasted 3.3%. This marks a decrease from October's figure of 3.5%.

UK retail sales surpass forecasts

Data from the UK this morning indicated positive trends in the Retail Sales Index for November. The country saw a slight year-on-year increase in retail sales, with a growth of 0.1%, an improvement over October's 2.7% contraction. Monthly figures were even more encouraging, with a 1.3% rise in retail sales, significantly exceeding the expected 0.4%.

Conversely, the final reading for the UK's Gross Domestic Product (GDP) growth rate in the third quarter was less optimistic than preliminary estimates. The annual GDP growth rate was adjusted to 0.3%, lower than the initially suggested 0.6% and down from the second quarter's 0.6% growth. Quarter-over-quarter, the UK's GDP saw a 0.1% contraction.

In other news, oil prices have surged, with Brent Crude nearing $80 per barrel. This increase is driven by concerns over supply disruptions from the Middle East amid rising geopolitical tensions, highlighted by recent attacks on ships in the Red Sea.

Shipping companies, including Germany's Hapag and Hong Kong's Orient Overseas Container Line, are altering routes or halting Red Sea travel, joining others like the British BP and Taiwan's Evergreen Line in response to security concerns.

Furthermore, Angola's decision to exit the Organization of the Petroleum Exporting Countries (OPEC) has raised questions about OPEC's ability to stabilize oil prices through supply control. The Angolan Oil Minister cited the country's interests as the reason for leaving, noting OPEC's production target for Angola at 1.11 million barrels per day, out of the organization's total of 28 million barrels per day.