Eurozone Inflation Picks Up Pace in Blow to Rate-Cut Hopes
Consumer prices were 2.6% higher on year in July, picking up pace from 2.5% in June
Consumer prices were 2.6% higher on year in July, picking up pace from 2.5% in June
Inflation unexpectedly heated up in the eurozone this month, presenting a fresh challenge to policymakers looking for signs that eurozone price rises are easing sustainably.
Consumer prices were 2.6% higher on year in July, picking up pace from in June, according to EU figures released Wednesday. That defied economists’ expectations for a slight decrease in inflation over the month, and leaves the rate further from the European Central Bank’s elusive 2% target. Inflation heated up over the month in Germany, France and Italy, the eurozone’s three largest economies.
Core inflation, which strips out the often volatile effects of food and energy prices, meanwhile stayed stable, against expectations for a slight decrease. But services, a key focus for policymakers at the European Central Bank, did fall slightly.
That decline makes a cut to interest rates the most likely outcome in September, said Franziska Palmas, an economist at Capital Economics.
Still, the higher headline rate may give pause to the central bank as it mulls its next steps on the direction of interest rates in the 20-member eurozone.
The ECB cut interest rates in the currency union for the first time in five years last month, but has refused to be drawn on when and how quickly it will continue to lower rates from their current heights. Markets still expect a second cut to rates at the bank’s next policy meeting in September, but with less certainty than earlier in the summer.
“Until services inflation falls more significantly, the ECB is likely to continue to ease policy only slowly,” Palmas said.
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“Only with competition can we become stronger and allow the industry to remain healthy,” Ma said
Alibaba Group co-founder Jack Ma said competition will make the company stronger and the e-commerce giant needs to trust in the power of market forces and innovation, according to an internal memo to commemorate the company’s 25th anniversary.
“Many of Alibaba’s business face challenges and the possibility of being surpassed, but that’s to be expected as no single company can stay at the top forever in any industry,” Ma said in a letter sent to employees late Tuesday, seen by The Wall Street Journal.
Once a darling of Wall Street and the dominant player in China’s e-commerce industry, the tech giant’s growth has slowed amid a weakening Chinese economy and subdued consumer sentiment. Intensifying competition from homegrown upstarts such as PDD Holdings ’ Pinduoduo e-commerce platform and ByteDance’s short-video app Douyin has also pressured Alibaba’s growth momentum.
“Only with competition can we become stronger and allow the industry to remain healthy,” Ma said.
The letter came after Alibaba recently completed a three-year regulatory process in China.
Chinese regulators said in late August that they have completed their monitoring and evaluation of Alibaba after the company was penalized over monopolistic practices in 2021. Over the past three years, the company has been required to submit self-evaluation compliance reports to market regulators.
Ma reiterated Alibaba’s ambition of being a company that can last 102 years. He urged Alibaba’s employees to not flounder in the midst of challenges and competition.
“The reason we’re Alibaba is because we have idealistic beliefs, we trust the future, believe in the market. We believe that only a company that can create real value for society can keep operating for 102 years,” he said.
Ma himself has kept a low profile since late 2020 when financial affiliate Ant Group called off initial public offerings in Hong Kong and Shanghai that had been on track to raise more than $34 billion.
In a separate internal letter in April, he praised Alibaba’s leadership and its restructuring efforts after the company split the group into six independently run companies.
Alibaba recently completed the conversion of its Hong Kong secondary listing into a primary listing, and on Tuesday was added to a scheme allowing investors in mainland China to trade Hong Kong-listed shares.
Alibaba shares fell 1.2% to 80.60 Hong Kong dollars, or equivalent of US$10.34, by midday Wednesday, after rising 4.2% on Tuesday following the Stock Connect inclusion. The company’s shares are up 6.9% so far this year.
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