Weekly Market Update- Week Ending 18/08/2023

This week, the main focus of investors’ attention was on inflation data released on Wednesday. Having fallen more than expected in June, there was an expectation that a further downward trend would be seen in July. That proved correct, and, broadly in line with expectations, headline inflation fell to 6.8% on an annualised basis, down from 7.9% the previous month. It was positive to see food price inflation continue to moderate, rising only 0.1% on the month and bringing the annual rate to 14.9% from 17.3% the previous month.

Although this figure was the lowest level since February last year, the stubbornness of core inflation (which strips out more volatile components like food and energy) will likely provide a few headaches for the members of the Monetary Policy Committee at the Bank of England (BoE). With core inflation remaining unchanged on the month, coupled with the strong wage growth data on Tuesday, it now seems highly likely the BoE will continue to tighten monetary policy when they next meet on the 21st September.

Away from investment markets, excitement is building ahead of the Women’s World Cup final this weekend. What a brilliant achievement – wishing the Lionesses the best of luck bringing it home on Sunday!

John Naylor, Chartered FCSI – Head of Investment Committee