• Second-quarter gross domestic product (GDP) fell in the United States (US) and inflation slowed in July
  
• The European Central Bank (ECB) raised policy rates by a higher-than-expected quantum
  
• Non-energy commodity prices across the board climbed down in July
  

The word recession is being bandied around the world as growth slackens and inflation cools. The jury is still out on that one, though. Nevertheless, GDP data for the second quarter of the year for major economies was largely in line with forecasts of an impending global growth slowdown: US GDP contracted for the second consecutive quarter, the United Kingdom (UK) saw GDP declining and is projected to enter a recession by year-end, and GDP slowed in China as well, with third quarter continuing to show signs of weakness.

With slowing demand, there are signs of inflation cooling: international commodity prices, particularly of Brent crude and metals, have climbed down from their 2022 highs owing to concerns over demand outlook. The signs are evident for the US and Japan, where headline inflation slowed in July. However, the worst is probably yet to come for the UK, with the central bank forecasting double digit on-year inflation by October. Thus, even as supply-side inflation pressures ease, demand-side inflation drivers are also seen softening, pinched down by higher prices and reduced consumer purchasing power. Yet, inflation remains much higher than the targets set by respective central banks. Hence, their battle using the tool of monetary policy tightening seems far from over.