US consumer prices unchanged in July as cost of gasoline plunges

Inflation pressures until recently had been concentrated in goods, but consumers have refocused spending on services as the pandemic eased.
Inflation pressures until recently had been concentrated in goods, but consumers have refocused spending on services as the pandemic eased.
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Updated 10 August 2022

US consumer prices unchanged in July as cost of gasoline plunges

US consumer prices unchanged in July as cost of gasoline plunges

WASHINGTON: US consumer prices were unchanged in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for weary Americans who have watched inflation climb over the past two years.

The Consumer Price Index was flat last month after advancing 1.3 percent in June, the Labor Department said on Wednesday in a closely watched report that nevertheless showed underlying inflation pressures remain elevated as the Federal Reserve mulls whether to embrace another super-sized interest rate hike in September.

The reading was the largest month-on-month deceleration of price increases since 1973 and followed on the heels of a roughly 20 percent drop in the cost of gasoline. Prices at the pump spiked in the first half of this year due to the war in Ukraine, hitting a record-high average of more than $5 per gallon in mid-June, according to motorist advocacy group AAA.

Economists polled by Reuters had forecast a 0.2 percent rise in the monthly CPI in July. The Fed has indicated that several monthly declines in CPI growth would be needed before it lets up on the aggressive monetary policy tightening it has delivered to tame inflation currently running at a four-decade high.

HIGHLIGHTS

The Consumer Price Index was flat last month after advancing 1.3 percent in June.

Food is one component of the CPI that remained elevated in July.

Real average weekly earnings rose 0.5 percent in July.

But the lower-than-expected CPI data ignited a strong rally in equity markets, with the S&P 500 index up 1.5 percent in mid-morning trading. Investors immediately pared bets the Fed would deliver a third straight 75-basis-point rate hike at its Sept. 20-21 meeting, instead seeing the US central bank likely to opt for a half-percentage-point hike.

“This is not yet the meaningful decline in inflation the Fed is looking for. But its a start and we expect to see broader signs of easing price pressures over the next few months,” said Paul Ashworth, chief US economist at Capital Economics.

US consumer prices have been surging due to a number of factors, including snarled global supply chains, massive government stimulus early in the COVID-19 pandemic and Russia’s invasion of Ukraine.

Food is one component of the CPI that remained elevated in July, rising 1.1 percent last month after climbing 1 percent in June.

In the 12 months through July, the CPI increased by a weaker-than-expected 8.5 percent following a 9.1 percent rise in June. Underlying inflation pressures, which exclude volatile food and energy components, also showed some green shoots despite remaining strong.

The so-called core CPI rose 0.3 percent in July, a 10-month low, after climbing 0.7 percent in June, helped by an almost 8 percent fall in the cost of airline fares, but still increased 5.9 percent in the 12 months through July, matching the pace in June.

Inflation in the cost of rent and owners’ equivalent rent of primary residence, which is what a homeowner would receive from renting a home, rose at almost the same pace as in June. Shelter costs comprise about 40 percent of the core CPI measure.

Tight labor market 

A separate Labor Department report on Wednesday showed real average weekly earnings rose 0.5 percent in July, the first monthly increase since last September and largest gain since January 2021.

Inflation pressures until recently had been concentrated in goods, but consumers have refocused spending on services as the pandemic eased. Fed policymakers are fearful that accelerating service-sector inflation will be more difficult to unravel.

There was little relief on that front, with prices for services excluding energy-related items rising at a 5.5 percent annual rate in July, the same pace as in the prior month, although there was a decline in the monthly reading.

Wednesday’s inflation reading followed the release last Friday of the Labor Department’s monthly employment report, which showed stronger-than-expected job growth and wage gains in July. The economy created 528,000 jobs last month and the unemployment rate fell back to its pre-pandemic low. That employment data will make it harder for the Fed to bring the economy into balance soon.

Labor market tightness is also underscored by the fact that, although US job openings fell to a nine-month low in June, there were still almost two jobs for every unemployed person.


Abu Dhabi Chamber of Commerce forms new board for businesswomen council

Abu Dhabi Chamber of Commerce forms new board for businesswomen council
Updated 02 October 2022

Abu Dhabi Chamber of Commerce forms new board for businesswomen council

Abu Dhabi Chamber of Commerce forms new board for businesswomen council
  • Council enables female entrepreneurs to capitalize on business opportunities

ABU DHABI: The Board of Directors of the Abu Dhabi Chamber of Commerce and Industry has formed a new board for the Abu Dhabi Businesswomen Council, Emirates News Agency reported.

The new board’s mission is to help female entrepreneurs improve their skills, introduce them to relevant laws and policies, and teach them how to take advantage of local and federal government initiatives.

It is part of the chamber’s efforts to help businesswomen and female entrepreneurs in Abu Dhabi contribute to the emirate’s economic growth.

The ADBWC board, chaired by Asma Al-Fahim, is made up of Abu Dhabi Chamber board members as well as successful Abu Dhabi businesswomen such as Nour Al-Tamimi, Dr. Khadija Al-Ameri, Marwa Al-Mansoori and Shaikha Al-Nowais.

“Over the past 50 years, the UAE has placed women’s empowerment amongst its top priorities and supported the Emirati woman to be a key partner in building the UAE,” Al-Fahim said.

She added: “The support of H.H. Sheikha Fatima bint Mubarak, chairwoman of the General Women’s Union, president of the Supreme Council for Motherhood and Childhood, supreme chairwoman of the Family Development Foundation and honorary chairwoman of the ADBWC, played a huge role in women’s development in all fields, especially entrepreneurship. Thanks to H.H. Sheikha Fatima, the Emirati woman is now equipped with all the factors of success to occupy her proper place regionally and internationally.”

Al-Fahim added that the ADBWC is eager to increase communication with businesswomen in Abu Dhabi in order to keep them up to date on the latest economic changes.

Furthermore, Al-Fahim said that the council will launch new initiatives and programs to support the business environment, giving female entrepreneurs the necessary tools to capitalize on business opportunities locally, regionally and internationally.


Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.
Updated 02 October 2022

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

RIYADH: Saudi healthcare provider Mouwasat Medical Services Co. said that it has completed the acquisition of 51 percent of Jeddah Doctors Co. in a deal worth SR102 million ($27 million).

The financial impact of this acquisition is expected to appear in the third quarter of 2022, according to a bourse filing.

Jeddah Doctors Co. is a Saudi closed joint stock company that owns a hospital presently under construction in Jeddah called Jeddah Doctors Hospital.


TASI in green as recession concerns ease: Closing bell

TASI in green as recession concerns ease: Closing bell
Updated 02 October 2022

TASI in green as recession concerns ease: Closing bell

TASI in green as recession concerns ease: Closing bell

RIYADH: The Saudi main index ticked up in its first trading session of October as investor recession fears subsided.

The Tadawul All Share Index ended  0.72 percent higher to reach 11,487; the parallel market Nomu edged 0.34 percent higher to 19,939.

Saudi oil giant Aramco ended with a 0.28 percent decline, while Rabigh Refining and Petrochemical Co. edged up 1.31 percent.

The Saudi National Bank, the Kingdom’s largest lender, fell 0.63 percent, while Saudi British Bank increased by 2.43 percent.

The Kingdom’s most valued bank Al Rajhi gained 1.48 percent, while Alinma Bank gained 1.93 percent.

Saudi Paper Manufacturing Co. decreased by 0.19 percent, after it signed SR166 million ($44 million) agreement with Italy-based Toscotec for a raw tissue paper roll production line.

Retal Urban Development Co. dropped 0.28 percent, after its shareholders approved a cash dividend of SR2 per share for the first half of 2022.

Tihama Advertising and Public Relations Co. declined 1.61 percent to lead the fallers, after the company and UK-based WPP postponed their merger agreement until Oct. 31, 2022.

Middle East Healthcare Co. led the pack of gainers with an increase of 9.93 percent.


PIF’s green bond issuance to bolster market, says London bourse official

PIF’s green bond issuance to bolster market, says London bourse official
Updated 02 October 2022

PIF’s green bond issuance to bolster market, says London bourse official

PIF’s green bond issuance to bolster market, says London bourse official

RIYADH: Saudi Arabia’s Public Investment Fund green bonds will help bolster the regional and global green bond market, which last year amounted to $900 billion, the head of Debt Capital Markets and Funds at the London Stock Exchange told Al-Arabiya.

The fund currently manages assets of over $600 billion. The PIF targets those sectors for investment that are in line with the framework of green bonds and the fund offers complete transparency to investors, Shrey Kohli added.

As of now, the framework and prospectus of the PIF are available on the London Stock Exchange platform, which allows investors to gain an understanding of the fund’s strategy.

Kohli said the London Stock Exchange supported the PIF during its tour to promote the green bonds and fund witnessed an overwhelming investors’ response from around the world.

The fund has hired a large group of banks including Citi and JPMorgan to arrange a debut issuance of multi-tranche US dollar-denominated green bonds.

BNP Paribas, Citi, Deutsche Bank, Goldman Sachs and JPMorgan, mandated as joint global coordinators and active book runners.

A debut issuance in tranches of five, 10 and potentially a longer-dated tenor will follow, subject to market conditions. The issuance will be under GACI First Investment Co. and guaranteed by the PIF.

Credit Agricole, First Abu Dhabi Bank, HSBC, Mizuho, SMBC Nikko, SNB Capital, Societe Generale and Standard Chartered are also active book runners, while ANB Capital, BofA Securities, Bank of China, GIB Capital, ICBC, IMI Intesa Sanpaolo, Morgan Stanley, MUFG, Natixis, Riyad Capital and Saudi Fransi Capital are also on the deal.


SAGO buys 5k tons of wheat for $2.3m from local farmers

SAGO buys 5k tons of wheat for $2.3m from local farmers
Updated 02 October 2022

SAGO buys 5k tons of wheat for $2.3m from local farmers

SAGO buys 5k tons of wheat for $2.3m from local farmers

RIYADH: The Saudi Grains Organization has bought the 16th batch of wheat worth SR8.84 million ($2.35 million) from 18 local farmers.

It is part of the organization’s arrangements to ensure adequate wheat supply by procuring grain from abroad and through local farmers. 

The current batch of local wheat weighed 5 tons, according to a SAGO statement.

Since the beginning of the current season, it added, wheat worth SR823.53 million has been bought from local farmers.