Following a 0.2% increase in July 2024, the British Retail Consortium reported that store prices decreased by 0.3% in August when compared to the same month in 2023.

Non-food goods saw their largest price decline in over three years; falling by 1.5%, while food prices increased by 2.0%, the least since November 2021. This increase was slower than the 2% increase in July.

“Shop price inflation has fallen again in August as many non-food retailers have kept promotional support due to the unpredictable weather,” said Mike Watkins, head of retailer and business insight at market research firm NielsenIQ, which compiles the data.

“Food retailers have introduced more price cuts to help drive incremental sales during the ‘summer of sport’,” Watkins added, referring to the Paris Olympics and the men’s Euro 2024 soccer tournament.

Prices in large retail chains were the subject of the BRC survey from August 1 to August 7.

For the first time this year, the most recent official indicator of annual consumer price inflation, which takes into account both services and retail goods, went up from 2.0% to 2.2% in July.

As the impact of the significant drops in energy prices in 2023 lessens, the Bank of England projects that CPI inflation will reach about 2.75% by year’s end before rising to the BoE’s target of 2% in the first half of 2026.

Investors anticipate that the BoE will lower interest rates by at least one-quarter point before the year ends. Interest rates were lowered from their 16-year high earlier this month.

Meanwhile, the UK private sector expanded faster than anticipated in August, marking the fourth month of consecutive increases in activity. This resulted in the pound reaching a 13-month high versus the dollar and suggested strong economic growth in the upcoming summer.

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Gazprom’s shares were up 1.1% after the results, outperforming the borader Moscow stock market, which was 0.8% higher.

Gazprom shipped more than 101 billion cubic metres of natural gas to the EU and Turkey in the first half of 2018, which was up 6% year-on-year and accounting for around a 34% share of Europe’s gas market.

The Russian oil producer said on Thursday it had almost doubled year-on-year net profit in the second quarter to $1.4 billion on higher oil prices and rising production from new projects.

The results come after US President Donald Trump’s national security advisor John Bolton condemned the proposed Nord Stream 2 gas pipeline between Russia and Germany on a visit to Kiev on Friday. It was stressed that Europe was taking a streategic risk by relying on Russian gas.

“It’s not just the economic significance of being heavily dependent on Russia for the supply of natural gas and petroleum, but the strategic significance of it as well,” Bolton told journalists after meeting Ukrainian President Petro Poroshenko during a visit to Kiev.

On Wednesday Gazprom said its average gas export price rose by a quarter to $203 roubles per 1,000 cubic metres in the first half of this year.

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The total sales value of the overall area booked also improved to $2.4 bn in the financial year 2018 compared to $1.8 bn a year ago. This registered a growth of 35.1% for the period under consideration, according to ICRA.

Improving demand from homebuyers as well as a preference for an established real estate brand that has a proven track record of delivery has resulted in customers gravitating towards bigger players. Thanks to this, there is improvement in demand and steady new launches, said ICRA.

The operational health of the real estate sector has improved significantly during the financial year 2018 as compared to 2017, going by the key parameter changes of major listed realty players. As per an ICRA note, a key indicator in this regard is the quarter-to-sell (QTS), which acts as a reflection on the number of quarters required to sell the available inventory as well as a denominator of the real estate sector’s recovering operational health.

In FY 2018, QTS has improved to 10 quarters at the end of March 2018, from 14 quarters at the end of March 2017. This improvement is a reflection on the improving velocity of sales, according to the report.

“Notable pick-up in demand coupled with steady new launches has resulted in an improvement of QTS. In the post-RERA era, we expect the organised players to gain market share. Further, new sales outstripped new launches for the first time over the last four years ending FY 2018,” stated Manav Mahajan, assistant vice president, ICRA.

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After a period of slumping, energy professionals are expecting oil prices to increase to about $55-60 per barrel in 2017 and $60-65 per barrel in 2018, closing the decade at around $70. Taken as a momentum indicator in the market, the gradual increase in cost hides a series of factors and causes.

The causes for this sustained growth in oil prices are two-fold: a pledge from OPEC, Russia and oil producers to cut production by 1.8 million barrels per day on one side, and technological advancements allowing the extraction of more crude oil than ever on the other.

With contradictory effects – one decreasing production and the other increasing it – these factors will drive the energy market to bear witness to a rare occurrence, namely the increase in availability of a product accompanied by an increase in its demand and price.

Since 2014, ramped up production from Riyadh and the Gulf states have driven oil prices lower than expected, driving the US shale producers and their high costs of production out of business. However, while oil fields take about four years to develop before allowing production, shale oil can be extracted in a few months, generating concerns regarding competition.

Now, as the prices increase, the same OPEC states want to benefit from the spike in prices but without encouraging their US competitors to return.

US internal-market statistics support the trend toward the increase in price. According to the independent US Energy Information Administration, by March, North Sea Brent crude oil prices averaged between $50 and $55 per barrel for five consecutive months.

West Texas Intermediate crude oil prices are following suit, signaling the reaction on the US oil market. The same EIA expects a 2.4% growth in the annual average US residential electricity prices.

As a result of the higher crude oil prices, the summer driving season in the US, a period in which demand for gas and oil will only increase, will drive the price to $2.36 per gallon, compared to last summer’s $2.23 per gallon.

Moreover, the growth in demandfor energy will expand to the coal industry as well, with an expected 5% increase in production and price, after falling by the same percentage in the 2015-2016 period. This can only further encourage the present administration to follow its promises of expanding the coal sector and to assume recognition for it.

The political climate in which this increase in oil prices is occurring is that of a political and economic state of uncertainty regarding one, if not the most important international player – the United States. With an administration that is unwilling to define the degree of its climate denial stance, the US managed only further to empower oil producing countries and corporations.

With a defunded EPA and a budget that economist Joseph Stiglitz calls ‘made up’ and without economic sense, the US is slowly losing its grip on directing both climate change efforts and the oil markets.

Moreover, given its new concomitantly protectionist and de-regulatoristdrive, the US’s immediate tendency is to focus its attention on the internal markets and to block out external influences on its economy. Except it could never possibly do so.

The architect of an economically interconnected world, the US could never even partly pull away from its creation. Oil prices are the best example, as almost no country, outside of the producers such as OPEC or Russia, could be fully self-sufficient in terms of energy.

By alienating its NATO allies and other economic partners, especially in Europe and Asia, the US is losing its influence on the international stage for the first time in a century.

Ever since the end of the Second World War, the world has been faced with a symbiosis between oil and politics. A pressure tool by excellence, the resource powering the modern world has been at times either a bargaining chip or a crisis-causing weapon for both sides.

With so many competing factors, ever-changing circumstances and suspicion from both producers and consumers, the oil industry is a metaphor for the political sphere. What’s next? More of the same. Volatility remains the natural state of a market that is so deeply connected to international politics and power.

In truth, a controlled, gradual increase in oil prices, if continued, is the closest semblance of stability that is to be achieved in the energy market. As everyone knows, stability is always the preferred condition for any economic agents, and that includes OPEC and Russia.

Ethan Featherly is a financial analyst and content manager at Admiral Markets

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The institution’s Board of Directors approved the Second Expenditure Rationalization, Energy Efficiency and State-owned Enterprise Governance Development Policy Financing (DPF) Project for a total of $1.443 billion, including guarantees from the governments of the United Kingdom ($371.82 million) and Canada ($72 million), a testament of strong international support to Iraq. The DPF’s key development objectives focus on: (i) supporting expenditure rationalisation; (ii) improving energy efficiency; and (iii) enhancing the transparency and governance of state-owned enterprises.

“Despite an ongoing war and low oil prices, Iraq is undertaking bold transformational reforms that will safeguard economic stability and lay the foundations for longer term private sector development and inclusive growth for all Iraqis,” said Ferid Belhaj, Director for the Middle East, World Bank. “The reforms will help build trust between Iraqi citizens and their government, by making the management of public funds more efficient and transparent and expanding social safety nets to reach the most vulnerable segments of the population.”

Separately, the Bank’s governing body also endorsed a $41.5 million operation for the Modernization of Public Financial Management Systems, which supports the overall objectives of the DPF series and aims to support Iraq’s public financial management system.

“This operation is complementary to the objectives of the DPF and will support the government in its goal to improve transparency in the management of public funds and financial information and modernise public procurement practices across many federal and governorate agencies,” said Robert Bou Jaoude, the Bank’s Country Manager for Iraq.

The overall financial assistance package is aligned with the government’s recovery blueprint for 2015-2018. It is also in line with the World Bank’s strategy for the Middle East and North Africa, which calls for renewing the social contract in fragile states, supporting regional cooperation, bolstering the resilience to refugee crises, and initiating reconstruction and recovery programs where needed.

With the new package, the World Bank’s present engagement in Iraq rises to nearly $3.4 billion, including multi-sectoral support to the reconstruction and rehabilitation of areas recently recovered by government forces and a transport corridor investment.

In addition, the Bank is providing wide-ranging technical assistance to the Kurdistan Regional Government.

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IFM Correspondent

November 3, 2016: China’s services sector grew at the strongest pace in four months up to October as new business picked up, encouraging companies to hire more workers, a private survey showed.

The Caixin China General Services PMI (Purchasing Managers’ Index) came in at 52.4 in October, firming from 52 in September, according to the survey conducted by financial information service provider Markit. A reading above the 50 mark suggests expansion in activity on a monthly basis while a reading below 50 suggests contraction.

For service providers, the new orders segment in October grew at a moderate rate, but the demand for manufactured goods increased markedly, leading to the fastest increase in total new orders for both sectors combined since November 2014.

Service companies grew exponentially, and some firms also experienced backlog due to high demand and capacity constraints. Many firms were required to hire more employees to keep up with new orders. Firms that hired workers said that they are expanding and expecting orders to continue growing in the future.

However, the service companies reported that they had to maintain same selling prices or increase them by a small margin due to excessive competition in the service industry.

October’s business activity growth was ‘mainly due to a faster increase in manufacturing output’, said Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group, a subsidiary of Caixin Insight Group.

He explained that it would be possible to sustain stability in the fourth quarter if supporting policies are maintained and not relaxed.

There is a general opinion among service providers that business activity will flourish in the coming year.

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September 6, 2016: The price of oil jumped by 5% after Russia and Saudi Arabia discussed ways to stabilise oil prices on the sidelines of the G20 summit in China.

Both countries said they will not act immediately but could limit output in the future. The joint statement was signed by the respective energy ministers followed by a meeting between Russian President Vladimir Putin and Saudi Deputy Crown Prince Mohammed bin Salman.

Saudi Energy Minister Khalid al-Falih said that there is no need to “freeze production today, there is time to take this kind of decision”. However, he said, freezing production is one of the possibilities. The joint statement marks a significant development in the Saudi-Russia relationship. The two countries have been on opposite ends with regards to Iran and Syria.

Though most OPEC members have of late agreed to freeze production in order to stabilise the market, oil analysts do not have high hopes from the joint statement, especially after having seen OPEC try and fail to reach any sort of agreement for more than a year now. Also, the dynamics between various OPEC members is not very good, to say the least.

John Hall, chairman, Alfa Energy, says that though the announcement is significant, there is nothing much to gain from the statement since all OPEC parties need to agree to this. “I do not think Iran is going to agree on this soon since they are still below their pre sanction production level,” he says.

Putin, in an interview to Bloomberg, said that ‘from the viewpoint of economic sense and logic, it would be correct to find some sort of compromise. I am confident that everyone understands that. We believe that this is the right decision for world energy’. In fact, Putin disclosed that Russia had supported a freeze even in April this year.

OPEC will hold informal talks in Algeria later this month. Its next official meet is scheduled in November in Vienna.

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Suparna Goswami Bhattacharya

July 15, 2016: With an eye on increasing its non-oil revenue, Saudi Arabia is considering a plan to tax millions of expats residing in the Kingdom. The proposal was included in the country’s National Transformation Plan (NTP), an ambitious multi-year programme released in June.

Finance Minister Ibrahim al-Assaf clarified that the “tax element is only an initiative that will be discussed”.

However, economists around the world do not think the plan will see the light of the day as it could hamper the Kingdom’s ability to attract foreign resources that is needed to revive growth. However, even the possibility has sent many expats in a state of tizzy.

“The main incentive of working in Saudi Arabia is the salary and perks. The move, if it actually comes to being, will lead to mass exodus of expats, unless of course you are in a senior position in a company,” says an expat of Indian origin working for a cement company in Saudi Arabia.

There are many changes imposed by Deputy Crown Prince Mohammed bin Salman. For instance, the kingdom will be joining other members of the six-nation Gulf Cooperation Council (GCC) in imposing value-added taxation (VAT) starting from 2018. Furthermore, post COP21 in Paris, there has been pressure on Saudi Arabia to reduce the use of fossil fuels. Hence, the Kingdom is preparing for a future of low oil prices.

Jacob Kirkegaard, senior fellow at Peterson Institute of International Economics, says, “Permanent loss of oil revenue means that they need additional income from elsewhere. Taxing expats does not cost much to the Kingdom politically as foreigners have no voice. This is also, in a way, in line with the Islamic tradition of taxing non-believers of Islam.” He adds that taxing only will foreigners also help in Saudisation. “Taxation will increase their (foreigners) labour cost, thus incentivising the private sector to hire more Saudi nationals.”

The NTP is a detailed road map of government initiatives which aims to reduce government spending on state salaries from 45 per cent to 40 per cent by 2020 and increase the role of the private sector in the economy from 40 per cent to 65 per cent by 2030. In fact, a similar idea was floated in the 1980s when oil prices had plunged to below $10. However, foreigners were so outraged by the potential impact that they went on a strike, including military contractors, grounding air force planes until the authorities backed down.

According to an expert who did not wish to be named, every year there is a lot of capital moving out of the country. “Last year, $40 billion was transferred outside of Saudi Arabia by expats. This is a wasted resource. However, at the same time I do not see this as a practical move since diversification of the economy means that that the Kingdom will be in need of more talent. If it is not available locally, they have to hire from outside,” the expert said.

Salman Al-Ansari, founder and president of the Washington DC-based Saudi American Public Relation Affairs Committee (SAPRAC), says, “This is still in the idea stage. I do not think there is much to panic as the government is smart enough not to take any haphazard decision that will have a long-term impact.”

Though all nations in the Gulf are going through tough times because of the fall in oil prices, the move is unlikely to be replicated by others. “The other countries have a much lesser population than Saudi and hence need less revenue. On the other hand, a place like Dubai is de facto a global tax haven and the business model that cannot survive by imposing income tax on foreigners. I doubt this policy will be replicated,” says Kirkegaard.

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Suparna Goswami Bhattacharya

July 6, 2016: Britain’s historic decision to leave the EU has sparked a period of volatility across the world’s financial markets. The pound sank to multi year lows against the dollar. David Cameron’s decision to step down has only added to its woes.

However, even the darkest clouds come with a silver lining. The deterioration will now allow investors from around the world, especially the Middle East, to invest in London’s residential property.

International real estate consultancy, Cluttons, states that for those invested in the property market, the deterioration in the value of the pound overnight will have erased any gains in recent years, particularly buyers from the Gulf, whose currencies retain a fixed peg to the US dollar.

Basically, any US dollar or UAE dirham investor will find the price of an average Central London residential asset cheaper by $96,000 (Dhs 350,000). “Gulf investors eyeing up a London residential asset will find it 31% cheaper than it was during the last market peak in Q3 2007, suggesting that we may be on the cusp of seeing a significant resumption in property investment activity in the British capital,” says Faisal Durrani, head of research, Cluttons.

Victoria Garrett, partner, head of international project marketing (MENA), Knight Frank, says, “For Middle East buyers, Europe is a key destination. Within Europe, UK is the primary market where Middle East investors like to put their money in. Hence, Brexit has only helped them go after the market they have been eyeing for a long time.”

A report by CBRE in January found that Middle East buyers invested £2.72bn on snapping up hotels in the UK in 2015. In fact, the UK was the biggest market for Middle East investors in the whole of Europe. Recent assets acquired by Middle East investors include Claridge’s, The Connaught and the Berkeley in London’s Knightsbridge. The report also stated that Middle East investors would soon account for up to 30 per cent of the sales of new prime London properties. For Middle East property investors, the top four locations are London, Paris, Milan and Lyon.

Garrett says, “UK remains a destination of choice for investors from the GCC who have been investing in the market for a long time. The fact that the market has a transparent legal system and property tenure is clear-cut and underpinned by the legal system makes it all the more attractive for buyers.”

In fact, from trophy assets to investment properties, not restricted to Central London, Middle East buyers cover the whole spectrum in terms of the type of properties they acquire. “The buyers are looking at areas like East London where they are finding very good value for money. We have also seen a drive for investment into areas such as Birmingham and Manchester where the entry points are much lower and the yields are higher,” says Garrett.

“There are Middle East buyers who are taking advantage of the current situation by converting their funds into sterling to show their readiness to buy. I will not be surprised if the second half of the year actually sees Middle East clients in the city hunting for properties,” says an expert from Jones Lang Lasalle (JLL).

Durrani says the longer term implications are too early to assess, but ‘we may start to see a change in London’s long stalled residential property market’. “This has the potential to free up much needed stock in the capital and allow the resumption of more regular levels of transactional activity,” he says.

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Main drivers for now are low fuel price, expanding middle class and high GDP growth

June 8, 2016: The Indian aviation market is flying high. It is set to become the third largest in the world by 2020. With 81 million trips, the domestic market grew at about 19% during the 12 months up to March 31, 2016 — the highest in the world. The metrics include passenger growth, aircraft growth, and freight growth.
For the period April-March 2015-16, passenger traffic increase was 17% yoy while rise in aircraft was 11.9% yoy when compared to the same period in 2014-15.

Experts attribute the growth to lower fuel price, expanding middle class and high GDP growth.

Rajiv Chib, director (aerospace & defence), PwC, says, “More disposable income is available with the middle class in India which has resulted in a three-fold increase  in passenger traffic in the past decade. With increased aircraft movement, I have little doub that we can be the third largest aviation market in the world by 2020.”

So much so that many airlines depend on India to feed their international networks. To be fair, India has an advantage as it is starting from a low base.
Binit Somaia, director South Asia at CAPA, says, “The market is underpenetrated relative even to other emerging markets. For example, the number of domestic seats per capita in China is almost five times higher. Nevertheless, there is little doubt we are the fastest growing market in the world.”

However, there are potential supply-side constraints which could curb the expansion of traffic. Key issues to be addressed include the availability of airport infrastructure, airspace and skills. And there is a need to implement a comprehensive and enabling policy framework if the market is to achieve its potential.

Many believe that regulation is one of the key areas where reforms are needed big time, primarily because India happens to be one of the most regulated aviation markets globally. Diogenis Papiomytis, director, aerospace & defence, Frost & Sullivan, rues that no one really benefits from these regulations. “Regulations impact every aspect of an airline’s operations. In the case of India, it affects fuel prices that carriers have to pay through high added sales taxes on aviation turbine fuel (ATF). Regulation negatively impacts the competitiveness of Indian airlines vis-à- vis their foreign competitors,” says Papiomytis. He adds that though foreign ownership and control laws have been relaxed, it has been done only partially. Even the 5 year/20 aircraft rule needs to be changed as it makes Indian airlines highly uncompetitive.

Even in terms of overall financial health, the aviation sector in India has seen improvement. The 1990s saw, perhaps, a dozen airlines fails while there have been only five actual bankruptcies in the past 10 years. Two major bankruptcies, Air India and Jet Airways, were averted. Financial year 2016 saw the industry come up with its best performance. The major contributors to this profitability are Indigo (~$300mn), Jet Airways (~$185 mn) and a healthier Spicejet (~$60mn).

However, to meet the increase in demand, there is a need for modernisation. “With increase in air traffic, there is a need to improve basic infrastructure of airports. Also, alternate airports may be required to reduce the congestion in metro cities,” says Chib.

But first, the government needs to get its act together. “As of now, there is no clear vision from the Indian government on how much it needs to invest, on what projects and over what timeframe. Some numbers bounce back and forth from Indian ministers, such as a cost of $120bn for the modernisation and construction of airports. But these mean nothing when there is no strategic vision or plan. Though some new terminals are getting built, it is too little and it is getting too late,” says Papiomytis. The effect will be that airlines won’t be able to add capacity in the next 5-10 years to meet increased demand levels, simply because of the saturated infrastructure.

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