Diverging Inflation and Growth Shape the Week (August 18 – 22, 2025 Recap)

The past week was marked by key economic releases, central bank policy decisions, and corporate earnings that influenced global markets. Inflation data from Canada, the UK, and New Zealand set the tone early in the week, followed by PMI surveys in Germany, the UK, and the US that highlighted diverging momentum across major economies. Commodity prices showed moderate weekly gains, while stock markets delivered mixed performances. On the earnings front, Baidu posted solid quarterly results, whereas Walmart missed estimates but provided upbeat forward guidance.

Major Economic Indicators and Events in Review

Tuesday, August 19

15:30 – Canada: CPI m/m (CAD)

In July, consumer prices rose 1.7% compared to a year earlier, a slowdown from June’s 1.9% increase.

The main reason was cheaper gasoline, which dropped 16.1% from last year after already falling 13.4% in June. Excluding gasoline, inflation held steady at 2.5%. Grocery prices went up, and natural gas prices didn’t fall as sharply as in June, which helped offset the slowdown.

Month to month, overall prices rose 0.3% in July, or just 0.1% when adjusting for seasonal factors.

The USDCAD exchange rate increased by 0.47% compared to the previous day.

Wednesday, August 20

05:00 am – New Zealand: Official Cash Rate

The central bank of New Zealand cut its cash rate to 3% as the economy stalls, with inflation near the top of its 1–3% target but expected to ease toward 2% by mid-2026. Future rate moves will depend on the pace of recovery and inflation trends.

NZDUSD fell 1.19% from the previous day’s close.

09:00 am – UK: CPI y/y (GBP)

UK inflation edged higher in July 2025, with CPIH rising 4.2% and CPI up 3.8% year-on-year. On a monthly basis, CPI rose 0.1%, while CPIH was flat. Transport costs, especially air fares, drove prices higher, though housing costs offset some of the rise. Core inflation remained elevated, with services inflation steady and goods inflation picking up.

GBPUSD fell 0.24% on the day.

Thursday, August 21

10:30 am – Germany: Flash PMI (EUR)

Germany’s private sector expanded modestly in August, with the PMI at 50.9, the strongest since March. Growth was led by manufacturing, while services stagnated. Employment fell again, confidence softened, and both input and output prices rose slightly from July’s lows.

EURUSD ticked lower by 0.39% from the previous day.

11:30 am – UK: Flash PMI (GBP)

UK business activity grew at its fastest pace in a year in August, with the Flash Composite PMI rising to 53.0, driven by strong services growth while manufacturing remained weak. New business expanded at the quickest rate in 10 months, but employment fell for an 11th month as firms cut payrolls amid cost pressures. Input and output prices rose at their fastest since May, with service firms leading inflation. Despite uneven demand and ongoing global trade worries, business confidence improved to its highest since October 2024.

GBPUSD fell by 0.35% compared to the previous day.

16:45 – USA: Flash PMI (USD)

US business activity accelerated in August, with the Flash Composite PMI rising to 55.4, the strongest this year. Manufacturing drove the upturn, posting its fastest output and order growth in over three years, while services expanded at a solid pace. Hiring surged as backlogs of work built up, marking one of the strongest job gains in recent years.

However, tariff-driven cost pressures pushed input prices higher, leading to the steepest rise in selling prices in three years. While business confidence improved, concerns over government policies and trade uncertainty kept sentiment below early-2025 levels. The data suggest the economy is growing at a robust pace, with inflation pressures shifting the outlook toward a potential Fed rate decision in September.

USDJPY edged higher by 0.72% compared to the previous day.

Commodities

1. Crude Oil
   1. Crude oil prices increased by 1.00% over the past week
2. Brent Oil
   1. Brent was up 2.51% compared to the previous week
3. Gold
   1. The precious metal Gold (XAUUSD) concluded the week on Friday with a 1.07% weekly increase
4. Silver
   1. XAGUSD increased by 2.26% from last week

Stock Market

1. S&P 500 increased by 0.33%
2. DJIA was up by 1.59%
3. NASDAQ 100 decreased by 0.82%

Top Gainers

1. Tharimmune, Inc. (THAR) 249.63%
2. EpicQuest Education Group International Limited. (EEIQ) 119.26%
3. Laser Photonics Corporation (LASE) 100.40%

Top Losers

1. Star Fashion Culture Holdings Limited (STFS) -92.58%
2. Elong Power Holding Limited (ELPW) -91.25%
3. enVVeno Medical Corporation (NVNO) -79.63%

Company Earnings (August 18 – 22)

Wednesday, August 20: BIDU (Baidu, Inc.)

Thursday, August 21: WMT (Walmart Inc.)

Baidu reported Q2 profit of $1.02 billion, or $2.84 per share, with adjusted earnings at $1.90 per share. Revenue came in at $4.57 billion.

BIDU shares ticked higher by 0.18% from the previous week.

Walmart missed Q2 estimates with EPS of $0.68 on revenue of $169.34B, both below forecasts. The company raised Q3 2026 EPS guidance to $0.58–$0.60 and FY 2026 to $2.52–$2.62, and declared a $0.235 dividend.

WMT shares declined by 3.17% compared to the previous week.

Conclusion

Overall, the week underscored contrasting economic signals across major economies. Softer inflation in Canada and New Zealand contrasted with persistent price pressures in the UK and US, while PMI surveys highlighted relative strength in US and UK services against weaker European momentum. Commodity prices firmed, equity markets ended mixed, and earnings from Baidu and Walmart reflected the divide between tech-driven growth and retail sector challenges. Investors now turn to upcoming data and central bank signals for clearer direction on growth and monetary policy.