Japan Inflation Tops BOJ Target While UK Retail Sales Disappoint and Eurozone PMIs Soften in October

Japan's core consumer inflation climbed back above the Bank of Japan's 2% target in September for the first time in nine months, reinforcing market expectations of a near-term interest rate hike. Rising fuel costs, a weak yen, and robust artificial intelligence-driven demand were cited as the key drivers of renewed price pressure, with Reuters and Bloomberg both reporting the data cements the case for further monetary tightening.

British retail sales fell 0.4% month on month in September, more than the 0.1% decline forecast, reversing the 0.5% gain recorded in August. Excluding auto fuel, sales dropped a steeper 0.7% against a forecast of minus 0.1% and a previous reading of plus 0.6%. Year-on-year, total retail sales rose just 0.8%, well short of the 1.0% estimate and a sharp deceleration from the 2.4% pace in August; core retail sales also came in at 0.8% year on year versus a 1.4% forecast and a prior 2.7%. Bloomberg reported that consumer confidence fell to its worst level since Covid, compounding the picture of high-street weakness.

France's flash PMI readings for October fell sharply into contraction across the board, with manufacturing at 49.3 against a 50.5 forecast, services at 48.4 against 50.7, and the composite at 48.4 versus the 50.3 estimate, all well below September's readings above 50. Germany offered a mixed picture: manufacturing beat expectations at 54.2 versus a 53.5 forecast, but services slipped to 51.7 against 52.5 and the composite eased to 52.8 from 53.8. At the eurozone level, the flash composite PMI for October came in at 51.9, below the 52.7 forecast and September's 53.1, with manufacturing at 52.4 and services at 51.7, both missing estimates.

Singapore's headline CPI for September printed at 0.2%, down from 0.6% in August, while core CPI eased to 2.0% from 2.2%, both coming in below their respective forecasts. India's HSBC flash PMIs for October showed continued expansion, with the composite reading rising to 56.7 from 55.9, manufacturing steady at 54.9 versus 55.1 prior, and services improving to 56.2 from 55.2.