OECD Inflation at 3.2%; Sweden Lifts Rate to 2%

Arthi Gupta
05 Jul, 2011
New York City

OECD inflation surged in May on high food and energy prices. Private sector activity growth in the euro area slowed in June and retail sales declined 1.1% in May. Swedish central bank hiked key rate by 25 basis points.

[R]3:00 PM Frankfurt – OECD inflation surged in May on high food and energy prices. Private sector activity growth in the euro area slowed in June and retail sales declined 1.1% in May. Swedish central bank hiked key rate by 25 basis points.[/R]

OECD Inflation Rises

The inflation rate in the OECD area rose to 3 2% in May, the highest since October 2008 after rising 2.9% in April driven by an increase in food prices of 3.9% and energy of 14.2%.

Excluding food and energy, the consumer price index, rose 1.7% annually in May compared to the 1.6% increase in April, the highest since July 2009.

Euro-zone Retail Sales Drop

Euro-zone retail sales declined 1.1% on a monthly basis in May, reversing the revised 0.7% rise in April, data from Eurostat showed today.

From a year ago sales declined 1.9% in May compared to the 0.8% increase in April.

Sales in food and tobacco dipped 0.6% on a monthly comparison in May, offsetting the 0.6% gain in April. Non food product sales slid 0.9% in May, following a 0.5% rise in April.

Euro-zone Private Sector Activity Declines

Euro-zone private sector activity growth slowed more than estimated in June, to the lowest since October 2009. The Final Composite Purchasing Managers'' Index was at 53.3 in June, down from the flash estimate of 53.6 and a decline from 55.8 recorded in May.

The Business Activity Index tracking services fell to an eight-month low of 53.7 in June from 56 in May and was below the 54.2 according to the flash estimate.

Riksbank Hikes Rate

The Swedish central bank on Tuesday raised its key benchmark repo rate by 25 basis points to 2% to stabilize inflation close to the 2% target and resource utilization around a normal level.

German Service Sector Activity Up

German services business activity index rose to 56.7 in June from 56.1 in May, weaker than the flash estimate of 58.3, latest data from Markit Economics showed.

The composite output index that measures activity in both manufacturing and services declined to 56.3 in June from 57.1 in May, below the flash estimate of 57.3. This indicates the weakest pace of expansion in private sector activity since October 2010, reflecting a much slower rate of manufacturing growth.

French Service Sector Growth Slumps

The headline Markit/CDAF purchasing managers'' index for the French service sector dropped markedly to 56.1 in June from 62.5 in May. The June reading was below the flash estimate of 56.7.

Spanish Service Sector Growth Dips

The headline Markit purchasing managers'' index for the services sector for Spain decreased to 50.2 in June from 50.9 in May, data from a survey conducted by Markit Economics showed today.

The moderate growth in activity was driven by growth in hotels and restaurants and post and telecommunications.

Italian Service Sector Falls

Italy''s service sector fell in June according to the data from a survey conducted by Markit Economics and ADACI showed on Tuesday.

The headline Markit/ADACI Purchasing Managers'' Index for the service sector dropped to 47.4 in June from 50.1 in May.