Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here is the article:

Economic and financial indicators
In America consumer prices rose by 0.2% in June, after increasing by 0.4% in May. Prices were 4.3% higher than in June 2005. Core prices, which exclude the volatile categories of energy and food, increased by 0.3% for the fourth month in a row, thanks to rising rents. In the three months to June core inflation set an annual pace of 3.6%, though in comments to Congress this week Ben Bernanke, chairman of the Federal Reserve, said that he expects inflation to slow.

Industrial production in America rose by 0.8% in June. It managed an annualised rate of expansion of 6.6% in the second quarter, its fastest pace since 1999. Companies are now operating at 82.4% of their full capacity, the highest rate since June 2000, suggesting little slack in the economy.

America attracted a net capital inflow of $69.6 billion in May, up from $51.1 billion the month before. Private investors showed a strong appetite for government bonds, even as official creditors, such as foreign central banks, sold a net $14.3 billion of Treasuries. Consumer confidence ebbed in July, according to the University of Michigan's survey. The decline was attributed to dearer oil, geopolitical uncertainty and falling share prices.

Japan ended its zero-interest-rate policy, raising its key rate for the first time in nearly six years, to 0.25%. The central bank said it will adjust rates gradually, and that they will probably stay “very low” for some time. Japan's Nikkei 225 index fell by 4.9% this week, the Topix fell by 5.6%.

Annual inflation in the euro area remained unchanged at 2.5% in June. High prices for transport fuel, gas and heating oil kept inflation above the European Central Bank's ceiling of 2%. Meanwhile, industrial production beat expectations, rising by 1.6% in May from the previous month and by 4.9% from a year earlier.

The euro area's merchandise trade deficit reached €3.2 billion ($4 billion) in May, from a deficit of €1.9 billion in April and a surplus of 2.3 billion a year earlier.

In Britain prices rose beyond expectations last month, as annual inflation increased to 2.5% in June, from 2.2% in May. The figures raised the possibility of an interest-rate hike when the Bank of England next meets on August 3rd. The minutes of its last meeting revealed that the monetary-policy committee voted unanimously to keep rates on hold.

Emerging-market indicators
China's GDP grew by 11.3% in the year to the second quarter, thanks to strong investment and a plentiful harvest. It was the fastest expansion since 1994, prompting renewed fears of overheating.

Argentina's industrial production grew by 8.9% in the year to June, reflecting big gains in construction and carmaking.