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Daily Economic Update
11.01.2026
Egypt: Inflation stable in December, reinforcing room for cautious policy easing. Egypt’s annual urban inflation rate held steady at 12.3% y/y in December, unchanged from November, according to CAPMAS. On a monthly basis, inflation eased slightly to 0.2% m/m, down from 0.3% in the previous month, signaling contained price pressures at year end. The stability was mainly driven by continued deflation in food and non-alcoholic beverages, which declined by 0.7% m/m and rose by only 1.5% y/y, while most other CPI components were broadly unchanged. Food prices declined across a wide range of items, including poultry and meat, fish and seafood, eggs and dairy products, fruits, vegetables, and sugar, helping offset any residual pressures elsewhere in the basket. This inflation outcome provides additional room for the Central Bank of Egypt to continue its easing cycle in a cautious manner, while also offering some relief to the Ministry of Finance through lower debt-servicing costs. Looking forward, attention will shift to January and February inflation dynamics, particularly the period ahead of Ramadan, which typically sees higher import activity and could temporarily add pressure to prices.
US: December job report highlights a continuation of the decreased hiring but low unemployment trend. Non-farm payrolls in December increased by a lower than expected 50K down from 56K in November, with October-November jobs revised downward by a combined 76K to show a much larger drop of 117K in the two months. However, despite decreased hiring, joblessness remained low, continuing the recent trend, with the unemployment rate falling to 4.4% in December from a revised 4.5% in November and the participation rate ticking down to 62.4% from 62.5%. Wage growth accelerated to a four-month high of 3.8% y/y from November’s 3.6% but still modest compared to 2023-24 levels. Softer unemployment data strengthened the market pricing of a hold in Fed rates at the FOMC January 27-28 meeting to a near certainty. Meanwhile, non-farm labor productivity in Q3 rose by a very robust 4.9% (annualized), a two-year high, from an upwardly revised 4.1% in Q2. We note that sustained productivity improvements have been a key driver of a resilient US economy and the US’s growth outperformance amongst all developed markets. Labor productivity will likely receive a further boost from AI-driven technological advancements over the medium term, implying that the US economy could continue to post solid growth, offsetting the impact of the current weak job market. Additionally, unit labor costs fell 1.9% (annualized) in Q3, following a substantial drop of 2.9% in Q2, signaling that wage increases are no longer a major source of inflationary pressures that could help maintain sustained softness in services inflation. Finally, escalating geopolitical tensions to high levels, President Trump vowed to exercise a greater control on Greenland, saying a deal can be made either “the easy way” or “the hard way.” Trump hasn’t specifically ruled out a military takeover, while attempting to buy the island could also be considered by the administration. Given Greenland is an autonomous territory of another NATO member, Denmark, a forceful US takeover will upend US-EU relations and will have important global economic and political ramifications.
UK: Halifax data shows softening UK residential property prices in December. The Halifax house price index rose by just 0.3% y/y, down from 0.6% in November, the slowest annual increase in over two years. On a monthly basis, prices fell 0.6%, following a drop of 0.1% in November. Overall, these trends are largely similar to what was seen previously in the report from Nationwide, highlighting affordability challenges for home buyers amid a weak labor market and still high mortgage rates. However, anticipated further policy interest rate cuts by the Bank of England and the government’s higher welfare spending in 2026 could help support housing activity somewhat.
Eurozone: Relatively solid retail sales in November, signaling slightly firmer consumer demand. Retail trade volumes rose by a higher-than-expected 0.2% m/m in November, following an upwardly revised 0.3% increase in October. The November outcome reflected a mixed sector performance: food, drink & tobacco sales slipped 0.2% m/m, non-food products (excluding automotive fuel) advanced 0.4%, while automotive fuel edged down 0.1%. On an annual basis, retail sales growth accelerated to a four month high of 2.3% y/y, up from a revised 1.9% in October and surpassing market expectations of +1.6%.
China: CPI inflation reaches 0.8% y/y in December, the highest in nearly three years. Consumer price inflation rose to 0.8% y/y in December from 0.7% in November, reaching its highest level since February 2023, though below the market expectation of 0.9%. The moderate rise was driven mainly by accelerating food costs (1.1% y/y vs 0.2% in November) on account of bad weather conditions, and a late-year burst of holiday spending. Core inflation, which excludes food and energy, held at 1.2% y/y, staying at its highest level in 20 months, while factory gate prices declined by 1.9% y/y, staying in the red for 39 consecutive months, though the decrease was slightly smaller than expected and the least in over a year. The latest inflation data is unlikely to prompt any policy shift by the People’s Bank of China, which has kept interest rates unchanged since its last cut during the height of the US trade tensions in May. Despite modest signs of stabilization, deflationary risks persist amid limited stimulus measures.
Japan: Household spending growth rises to a six-month high in November. November’s real household spending rose 2.9% y/y (6.2% m/m), comfortably beating consensus estimates of a 0.9% decline and October’s 3% y/y fall. The increase was driven by a 20% y/y rise in transportation and communication spending (-9.2% in October) and a 10.2% y/y rise in education spending, with an Internal Affairs Ministry official stating that these are volatile categories that may not be indicative of an overall trend. While volatile, this six-month high in household spending growth came despite November’s cash earnings falling to nearly a four-year low of 0.5% y/y and real wages remaining negative for the eleventh month.