Rolling coverage of business, the world economy and the financial markets

• US food prices rise at fastest rate since 1981
• Oil, gas prices rise as Russian gas flows via Ukraine are disrupted
• ECB’s Lagarde cements expectations for July rate hike
• Lloyd’s of London AGM goes virtual amid climate protest threat
• Tui halves losses and predicts a ‘strong travel summer’
• Currency weakness, higher food and energy prices drive Chinese inflation higher
• Introduction: German inflation hits record high

National Grid has agreed to pay back £200m of revenues gleaned from subsea electricity cables early in an effort to cut painful household bills, reports Alex Lawson.

Under an agreement with watchdog Ofgem, the energy network operator must pay back revenues made from European ‘interconnector’ cables over a five-year period above a cap.

Since the price of materials is rising, we need to work to reduce the amount of materials we use as much as possible and to replace them with less expensive materials.

Investors worry Elon Musk may have to sell Tesla shares to fund Twitter deal, as global stocks slide and US dollar rises to pandemic high

Lloyds Banking Group has raised concerns over the “uncertain” outlook for the UK economy amid soaring inflation, warning that the cost of living crisis could result in higher defaults on its loans, reports our banking correspondent Kalyeena Makortoff.

It came as the bank reported a 14% drop in first quarter pre-tax profit to £1.6bn from £1.9bn a year earlier, although that was better than the £1.4bn that analysts had expected.

The Nasdaq led the equity market wipe-out overnight, with its near 4% retreat led by Tesla, which fell by 12.2%. You could look at it two ways.

Either Elon Musk sold his latest stock awards to generate the $21bn in cash for his part of the Twitter buyout, or the street is starting to wonder how he could possibly effectively run Tesla, Starlink, Space-X and Twitter simultaneously. I do as well.

Rolling coverage of business, the world economy and the financial markets

• Ukraine live updates

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

In the UK, retail sales fell 1.4% in March, following a 0.5% drop in February, as people cut back on fuel and food spending amid soaring prices.

Good weather usually means sunnier times for retail, and firms will hope that the summer months can play a small part in stimulating waning confidence among a general public coping with the harsh realities of rising prices everywhere they turn. In reality, each day brings fresh warnings from business leaders that prices will likely continue to climb, driving consumer confidence in the wrong direction for retailers.

This seems a rather strange reaction given that nothing he said yesterday was in any way surprising. A 50 basis point rate hike is already priced in, as well as the prospect that we could well see another one soon afterwards.

We also heard from European Central Bank president Christine Lagarde yesterday as she capped off a couple of days of some rather hawkish comments from the likes of Belgium’s Pierre Wunsch, and ECB vice president Luis De Guindos who followed on from Latvia’s Martin Kazaks by arguing that a July rate rise was on the table. She didn’t come across as anywhere near as hawkish as her colleagues, pointing to the June meeting as the moment to decide on next steps, and lightly pushing back on the idea of a fixed point.

• World Bank estimates there could be a 37% increase in food prices due to war in Ukraine
• Billionaire Bill Ackman sells Netflix shares at £400m loss
• Putin ally Alekperov resigns as president of Russia’s Lukoil
• Russia moves closer to debt default
• Ukraine live updates

Boris Johnson is in India at the start of a two-day visit, where he said he hopes to clinch a free trade deal for Britain by the end of the year.

Inflation in the eurozone has been revised slightly lower but remains at a record high as energy costs surge.

• Joe Biden expected to announce release of up to 180m barrels from US strategic petroleum reserve to cool oil market
• Gas prices rise amid standoff over rouble payments
• Jets linked to Russian oligarchs appear to have kept flying despite sanctions
• Energy websites crash as customers rush to submit meter readings
• UK house prices rise at fastest rate for 17 years
• Eurozone unemployment rate falls to record low of 6.8%
• Ukraine live updates

In Italy, inflation rose to an annual rate of 6.7% in March, according to a preliminary estimate from Istat, Italy’s statistics office.

Here’s a ranking of European inflation rates, based on the EU’s harmonised index of consumer prices (HICP) measure:

Inflation rose more than expected in France in March, reaching 4.5%. This is a figure that has not been seen since the 1980s, but it is still much lower than in neighbouring countries. Inflation will continue to rise in the coming months, before falling sharply.

For the next few months, we expect inflation to continue to rise, driven by energy and food prices, but also by inflationary pressures that are increasingly spreading to all sectors of the economy. The 5% mark for the national inflation indicator could be exceeded in the second quarter, even without further increases in energy prices. Indeed, all business indicators suggest that companies expect to set higher prices in the coming months.

Analysts say chancellor has wriggle room for limited package of measures in Wednesday’s mini-budget, as US Fed chair signals more aggressive rate rises to tame inflation

Bethany Beckett, UK economist at Capital Economics, has looked at what the chancellor might do tomorrow.

Notwithstanding the deterioration in the public finances in February, large revisions to the back data mean that borrowing in 2021/22 is on track to undershoot the OBR’s October 2021 forecast by a huge £23bn.

Even so, we suspect the sharper rise in debt interest costs in February than many expected may embolden the chancellor to keep a fairly tight grip on the public finances in tomorrow’s spring statement.

• Stock markets rally on China stimulus and Ukraine peace hopes
• Rouble edges higher ahead of Russian bond payments
• Introduction
• Ukraine live updates

The UK government released $530m of its debts to Iran, ahead of Tehran’s release of two British-Iranian prisoners, Iran’s semi-official Fars news agency reported.

The prisoners are Nazanin Zaghari-Ratcliffe, who had been detained by Iran for six years, and Anousheh Ashouri.

• ECB raises inflation forecasts, cuts growth outlook due to Ukraine war
• UK sanctions Chelsea FC owner Roman Abramovich and Rosneft boss Igor Sechin; Chelsea sale halted
• European stock markets fall ahead of ECB rate decision, oil prices rise
• UK fuel prices hit fresh record highs; a tank of petrol costs nearly £88
• CBI urges UK government support amid ‘looming crisis’ in energy bills
• Sony, Nintendo, Hitachi join corporate exodus from Russia
• Closing summary

Rishi Sunak is also facing intense pressure from Conservative colleagues to take action in this month’s spring statement to alleviate the cost of living crisis, which has been dramatically exacerbated by the Russian invasion of Ukraine, write our political editor Heather Stewart and political correspondent Peter Walker.

Asked about the impact of sanctions on Russia for consumers at home, the business secretary, Kwasi Kwarteng, told MPs on Wednesday he believed the public was “willing to endure hardships” in solidarity with the people of Ukraine.

The crisis is likely to have a negative impact on investment intentions of UK firms following Brexit and Covid. This is the worst timing possible, as business investment intentions were high coming into 2022. So the Government must move now to stimulate business investment to maintain UK growth, thereby demonstrating true independence from Russia.