Rising clothes and shoe prices, as well as more
expensive soft drinks, also pushed the CPI figure up.
However the figure remains in line with the with
the target of 2% set for the Bank of England's monetary policy
committee (MPC) by chancellor Gordon Brown.
"In line with expectations, up 2.0%. Bang in
line now with the MPC's target," said Adam Chester, chief
economist at HBOS group.
"It's quite interesting that the main upward
effect came from seasonal food prices - that was largely expected.
"What's also potentially interesting is that
oil prices, petrol prices, don't appear to have impacted significantly
on the June CPI."
He said the main impact from those increases would
be seen in the July and August figures.
The largest downward effect on inflation came from
recreation and culture, particularly audio-visual goods as prices for
a range of products, including computers and DVDs, fell this year but
rose a year ago.
EUROZONE GROWTH WARNING FROM OECD
The Organisation for Economic Cooperation and
Development (OECD) has told eurozone policymakers reform is need to
prevent weak growth until 2020.
An OECD report warns a growth limit of 2% can be
expected unless the challenge of competition if faced.
In 2005 growth would be 1.25%, slightly less than
last year, before reaching the 2% mark in 2006, it said.
The OECD advised the European Central Bank (ECB) to
hold its key interest rate at 2.0%, despite calls for a cut.
"It would seem reasonable for the ECB to hold
its rate stable as long as the outlook for price developments remains
in line with price stability over the medium term," the OECD said
in its latest survey of the 12-nation eurozone economy.
The persistent budget deficits and the near-zero
growth in several key European economies, not least Germany and Italy,
has prompted calls for the ECB to cut interest rates which have been
at 2% for more than two years.
But the OECD said that unless there were major
competitive reforms, including making labour markets more flexible and
integration of its services markets, then it faced a growing income
gap with the US.
"Boosting the poor growth performance to date
requires stepping up the pace of structural reforms and restoring
sound public finances," the OECD wrote.
European Central Bank governing council member and
governor of the Bank of Greece, Nicholas Garganas, also said there was
a case for reform.
JAPAN STOKES CHINA SEA DISPUTE
Japan's government has awarded a Japanese oil
company test drilling rights in a potential flashpoint maritime area
also claimed by China.
Teikoku Oil Co asked for the rights in April, after
Tokyo signalled a change in policy to allow test drilling.
China and Japan have held talks about how to share
out resources in the East China Sea, but have failed to agree.
China said the Japanese move would harm bilateral
ties, already strained by rows over history and resources.
"If Japan persists in granting drilling rights
to companies in disputed waters it will cause a serious infringement
of China's sovereign right," Chinese foreign ministry spokesman
Liu Jianchao told reporters in Beijing.
China has been drilling since 2003 within the area
both sides agree are in Chinese waters, but Japan is concerned that it
may be drawing gas from the area is considers to be its zone.
Japan has held off drilling while the two sides
have been trying to resolve the issue through talks, but these have
made no progress.
At the last round of talks on the issue, Beijing
suggested Japan and China engage in joint exploration of the area, but
Tokyo turned down that offer.
Teikoku will not be able to begin drilling
"There are many issues regarding the water
area such as safety so we want to make a decision on when actual work
will take place after consulting with the government agencies
concerned," the company said in a statement. Relations between
Japan and China have been deteriorating for months.
UKRAINE'S ECONOMIC GROWTH SLUMPS
Ukraine's fast-growing economy is losing some of
its zip as uncertainty about the investment environment and lower
metal prices take their toll.
Growth in the first six months of this year was 4%,
compared with almost 13% in the same period a year earlier.
The government has warned it may trim its 2005
growth forecast to 8%, down from the stellar 19.1% the year before.
Ukraine has gone through a difficult period since
the ruling administration was overthrown last year.
After long-standing President Leonid Kuchma was
toppled in the Orange Revolution, the new government pledged to cut
corruption, revitalise the economy, improve living standards, and move
Ukraine closer to its western neighbours.
Despite the good intentions, the administration has
failed to push through legislation paving the way for membership of
the World Trade Organization and recent debates have ended in
parliamentary punch ups.
With the good will that followed the change in
power fading, the state of the economy has come back into the focus.
Figures released earlier this week showed that
Ukraine's foreign trade surplus during the first five months of this
year tumbled to $794.6m from $2.1bn in the same period a year earlier.
Speaking earlier this week, President Viktor
Yushchenko admitted that some decisions taken after the revolution may
have hurt the economy.
More than six months on from the ouster of Mr
Kuchma, foreign investment in Ukraine has only increased by 3%.
CHINA'S RESERVES HIT $711BN
China's foreign exchange reserves, the
second-largest in the world after Japanís, hit $711 billion at the
end of June, up 51.1 per cent from a year ago, official data showed.
This reflected an increase of $20 billion in June alone, $8 billion
more than in the same month last year, the Peopleís Bank of China
said in a statement on its website.
The country added a total of $101 billion in
foreign exchange reserves during the first half of this year, the
central bank said.
That compared with a $67.3 billion increase in
foreign exchange reserves recorded in the same period of last year,
the bank said.
An unnamed central bank official said the end-June
total excludes $15 billion that was used for a capital injection into
the Industrial and Commercial Bank of China.
RUSSIAN ECONOMIC GROWTH SLOWS
Russian economic growth slowed in the first half of
2005 to 5.4 per cent according to preliminary data, casting further
doubt on President Vladmir Putinís aim of doubling the size of the
Russian economy by 2010, the Russian prime minister said. Mikhail
Fradkov, the Russian premier, said the pace of economic growth in the
first half of 2005 ìwill not enable us to completely achieve the
objective of doubling GDPî by 2010, according to a report by Russian
news agency Interfax.
At the end of June, Russia's economic development
minister, German Gref, also had warned that Putin's goal of doubling
GDP in the next five years was "not realistic". To meet the
target the Russian economy would need to grow at an average annual
rate above 7.0 per cent.
This was achieved in 2004, when the economy
expanded by 7.1pc compared with 2003, but the latest government
estimate for 2005 is for growth of only 5.8pc.
SINGAPORE RETURNS TO RAPID GROWTH
Singapore's economy has spurred itself back to
rapid growth on the back of a recovery in both manufacturing and
services, official figures show.
The city state expanded at an annual rate of 12.3%
in the three months from April to June.
The growth follows a 5.5% contraction in the first
quarter as drug firms lost sales to generic competitors, sparking
fears of recession.
Forecasters are now predicting a much stronger
performance for the full year.
The annual rate is the pace of expansion if the
three-month performance were to last for a full year, rather than a
measure of the actual expansion over the previous 12 months.
The government's full-year prediction for 2005 was
reduced from 3-5% to 2.5-4.5% following the January-March figures.
The expectation is now that the final result will
come close to the top of the new range.
Manufacturing drove part of the revival, amid hopes
of a pickup in electronics sales worldwide.
But services - accounting for two-thirds of the
country's economy - also put in a strong showing, at 4.2% on a year
UK TRADE DEFICIT NARROWS IN MAY
The UK's trade gap narrowed in May as falling
exports of chemicals and cars were offset by a rise in oil exports.
The difference between what the UK exported and
imported was £4.9bn ($7.2bn), down from April's £5.1bn.
The figure was higher than analysts' forecasts of a
£4.8bn deficit, said the Office for National Statistics (ONS).
Heightened supply worries helped push the price of
Brent crude through the £57 a barrel mark for the first time as
The UK's trade deficit with the enlarged EU was
virtually the same as that in April at £2.5bn, while the deficit with
non-EU countries narrowed to £2.4bn from £2.6bn.
There were higher exports of crude oil and precious
stones, while exports of cars and chemicals both fell. Imports of
capital goods and aircraft into the UK rose, the ONS said.
China's economic growth will slow to 8.6 per cent
in the third quarter and to 8.2 per cent in the fourth amid government
efforts to make growth more sustainable, the China Securities Journal
quoted a think-tank as predicting.
That would take full-year growth to 8.8 per cent,
significantly lower than 9.5 per cent seen last year and in 2003, the
paper quoted a report by the National Development and Reform
Commissionís Macroeconomic Institute as saying.
The slower pace of growth would be in accordance
with government efforts to adjust macroeconomic controls and would not
China would enter a cycle of low economic growth in
the coming years, the paper quoted the think-tank as saying.
S. ARABIA TO KEEP SUPPLY STEADY
Saudi Arabia has told global oil majors and
European and US refiners it will keep crude supplies steady in August
from July, traders said. With European and US crude stocks at the top
end of ranges for recent years, majors and European buyers were not
looking for more crude, traders said. "I donít think people were
asking for more," one trader said. "There is plenty of crude
available in the market."
Saudi Arabia's Oil Minister Ali al-Naimi has said
the kingdom was able to lift output but that there was no demand for
extra crude from the world's oil market due to bottlenecks in the
global refining system.
Opec in June decided to raise its oil production
target by 500,000 barrels per day effective July 1, but the move had
little effect on oil prices. Majors have been receiving about 80 per
cent of full contract volumes since May, while European refiners have
been receiving about 70-75 per cent of contracted volume for some
Russia recorded a record budget surplus of 726
billion rubles ($25.2 billion, 20.8 billion euros) in the first half
of 2005, with government coffers boosted by record oil prices and tax
settlements from Russian companies, preliminary figures from the
ministry of finance showed.
The figure is greater than the surplus for the
whole of 2004 of $24.5 billion.
Government receipts totalled 2,393.1 billion
rubles, 46 per cent higher than expected.
Yukos, formerly Russia's largest oil company,
contributed 151.5 billion rubles to the budget after settling a
backdated tax claim from the Russian authorities.
Spending totalled 1,657.1 billion rubles which was
in line with revised government forecasts.
SCHWARZENEGGER HAS $1M MEDIA JOB
Arnold Schwarzenegger is being paid at least $1m
(£567,000) a year as a consultant for fitness magazines, their
publisher has revealed.
American Media Operations said the former actor,
who is governor of California, was receiving 1% of the company's
advertising revenue. Critics say the deal could amount to a conflict
UK HOUSE PRICES SLOWING SLIGHTLY
Annual house price inflation slowed in May,
according to the Office of the Deputy Prime Minister (ODPM).
Prices rose by 6% in the year to May, the ODPM
said, compared with annual growth of 6.9% in April.
Recent surveys from mortgage lenders Halifax and
Nationwide have also shown annual growth rates slowing.
However, the ODPM said the average UK house price
rose slightly in May, standing at £182,651, compared with £181,832
OIL FUELS UK PRODUCER INPUT COSTS
Raw material costs rose at their fastest pace in 20
years in June as soaring oil prices continued to put pressure on
Producer input prices rose 2.1% between May and
June, giving an annual increase of 12.7%, according to the Office for
National Statistics (ONS). This was the largest annual rise since
WORLD TRADE TALKS START IN CHINA
Trade negotiators are gathering in the Chinese city
of Dalian in the hope of restarting flagging world trade talks.
The aim is to flesh out an outline deal announced
in May, which could break a deadlock on agriculture tariffs.
Farming is the big sticking point for December's
top-level World Trade Organization (WTO) summit in Hong Kong.
The Dalian talks involve the US, China and the
European Union, as well as the G20 group of developing nations and big
farming producers such as Australia.
Farming subsidies and tariffs have long been a key
problem in trying to reach a new trade deal.
PHILIPPINES' CREDIT WOES ESCALATE
The Philippines face rising borrowing costs after a
third leading ratings agency cut its sovereign debt outlook.
The downgrade by Moody's, which follows warnings by
Standard & Poor's and Fitch, came amidst a political storm
surrounding President Gloria Arroyo.
Ms Arroyo is embroiled in a row over accusations of
She has apologised for calling an election
commissioner while votes were being counted during May's elections,
but denies fraud and refuses to quit.
Calls for Ms Arroyo's resignation have come from,
amongst others, her former economic team. The team, which includes
finance secretary Cesar Purisima, quit last Friday.
India's second-biggest software firm Infosys has
reported a 37% rise in profits as foreign firms continue to outsource
parts of their business.
Net profits for the three months to June were
5.32bn rupees ($122m; £69m), on sales of 20.7bn rupees.
But the rise in profits still fell short of
analysts forecasts, which foresaw earnings of 5.41bn rupees.
TELEKOM AUSTRIA IN BULGARIA DEAL
Telekom Austria has bought Bulgaria's biggest
mobile phone operator Mobiltel for up to 1.6bn euros ($1.9bn;
Companies are betting that demand for phone
services is set to increase as Bulgaria's economy improves and it
prepares for European Union membership.
Mobiltel had 3.2 million subscribers at the end of
June. Bulgaria has a population of more than seven million.
JAPAN HIT BY WEAKER EXPORT DEMAND
Japan's current account surplus fell by 19.5% in
May, as the soaring price of oil boosted the value of imports, while
Japanese exports remained stagnant.
The surplus totalled 1.38 trillion yen ($12.4bn;
$7bn) before seasonal adjustments, the finance ministry said.
Current account data measures the flow of goods,
services and other financial transfers.
Weaker demand from Asia - and in particularly China
- hit exports, a key driver of the Japan's economy.
Japan's trade surplus slumped 57.4% to 474.3bn yen,
while exports rose just 1.7% to 4.58 trillion yen, official figures
"The current account surplus fell sharply as
import growth far outpaced export growth due to a rise in oil
prices," a finance ministry official said.
SPRINT PAYS $1.3BN TO BUY PARTNER
US mobile group Sprint is to buy its affiliate US
Unwired for around $1.3bn (£793m) in a deal that will end a series of
legal rows between the two.
Under the deal, Sprint will also assume US
Unwired's debt - which stood at $233m at the end of March.
Meanwhile, Unwired will end its legal actions
against Sprint, including a bid to end Sprint's tie-up with Nextel.
The Sprint-Nextel deal will create the third
largest mobile phone operator in the US drawing in revenues of $40bn.
A sharp rise in microprocessor sales has boosted
profits for US chip maker Advanced Micro Devices (AMD), lifting its
Net profit of $11.3m (£6.41m) for the March to
June quarter was better than investors had expected, albeit down from
$32m a year ago.
Sales of high-margin microprocessors rose 38%
during the quarter when compared with a year earlier. This offset weak
memory chip sales, leaving revenues flat at $1.26bn.
Apple Computer has reaped fresh rewards from the
popularity of its Pod music players, as sales and earnings rocketed in
the past quarter.
For the three months to 25 June, its profit rose to
$320m (£262.6m), up from $61m in the same quarter a year ago.
Sales surged 75% to $3.52bn, fuelled by a six-fold
increase in sales of 'Pods since the third quarter of 2004. The
company also shipped 1.2 million Macintosh computers during the last
BUSH PREDICTS BUDGET GAP CLOSING
US President George W Bush has said that the
nation's large budget deficit will be $94bn (£53bn) less in 2005 than
The White House now sees a deficit of $333bn for
the fiscal year to October, after the Office of Management and
Budget's (OMB) "mid-session" update.
Mr Bush also said the government was still on track
to cut the deficit in half by 2009.
The news came on the back of increased tax revenues
in recent months.
In February, the administration had estimated a
projected budget deficit of $427bn for 2005.
"There's some good news today, OMB is going to
announce that the 2005 deficit is $94bn less than previously
expected," Mr Bush said after holding a cabinet meeting.
"I told the Congress and told the country we'd
cut the deficit in half by 2009. We're ahead of projections now,"
Earlier this year, Federal Reserve chairman Alan
Greenspan warned that unless the huge budget deficit was addressed it
could have "severe" consequences.
SHELL FACES VENEZUELAN TAX DEMAND
Venezuela has ordered oil giant Shell to pay $131m
(£74m) in what it says is unpaid tax, as part of a clampdown on
alleged tax avoidance by foreign firms.
In a separate move, the country's tax authority
seized documents belonging to US oil firm Chevron which it said had
not been produced upon request.
Venezuelan authorities have said that foreign firms
may owe up to $3bn (£1.7bn) in unpaid taxes.
Neither Shell nor Chevron were available for
President Chavez has sought to maximise income from
His government is reviewing all foreign investment
in the mining industry to see if it provides maximum benefits to the
SAMSUNG HIT BY LOWER CHIP PRICES
Samsung Electronics, South Korea's largest firm by
value, saw a 46% fall in second-quarter profits on lower memory-chip
It made 1.69 trillion won (£0.89bn; $1.63bn) in
the quarter to June 30, down from 3.13 trillion a year ago.
But analysts had expected the firm to announce
lower profits of 1.63 trillion won on Friday last.
Lower memory chip prices were partly offset by
strong flat-screen sales and revenue fell 9% to 13.59 trillion won.
OIL PRICES BOUNCE BACK FROM LOWS
Oil prices have bounced back from the early heavy
falls triggered by the series of bomb attacks in London.
US light sweet crude recovered from a low of $57.20
a barrel, rising to $60.73, down 55 cents on the day.
In London, Brent crude fell to a session low of
$55.55, before recovering to $59.28, down 57 cents.
Dealers said the initial sell-off was sparked by
fears of a September 11- style economic slowdown in the wake of the
London bomb blasts.
The rebound in crude prices was aided by a
hurricane heading towards the Gulf of Mexico where much production and
refining capacity could be at risk.
RUSSIA APPROVES NEW SPACE PLANS
The Russian government has approved a space
programme for the next ten years.
The programme provides money for the development of
a reusable spacecraft to replace the ageing Soyuz manned launch
Russia also wants to start experiments to test
whether it is possible for humans to make the flight to Mars.
Under the plans, six volunteers will spend 500 days
in a mock space module in Moscow. Over 20 volunteers have already
applied to take part.
Russia has been struggling to finance the
International Space Station (ISS) in the absence of the US space
The Soyuz craft took over all trips to and from the
space station following the Columbia shuttle disaster in 2003.
But the new 10-year budget, reported to be about
300 billion roubles ($10.50 billion), is less than the US spends on
space in a year.
SAIC LINES UP MG ROVER RESCUE BID
Businessman David James' consortium is the third
party in talks with the administrators for carmaker MG Rover, the
Financial Times reported.
He said he would withdraw his proposal for turning
Rover into a sportscar-making company, branded MG.
But PriceWaterhouseCoopers, the administrators,
said on Thursday it was in talks with three groups: one from the UK.
This is thought to be Mr James.
The others are Nanjing and Shanghai Automotive
THAIS TO GET CHEAP AIDS DRUGS
Thailand has announced it will offer
anti-retroviral drugs for the treatment of HIV/Aids to all infected
Thais, at virtually no cost to the patient.
The drugs will be available on the government's 30
baht healthcare scheme, with treatments costing just under $1.
There are estimated to be approximately 500,000
HIV-positive people in Thailand.
The Thai government has pioneered the production of
cheap generic drugs to combat HIV/Aids.