Category Archives: Inflation

No extra money for public sector pay rises, Jeremy Hunt tells ministers

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Chancellor thought to have ruled out providing extra cash if PM decides to accept pay review bodies’ recommendations

Jeremy Hunt has told ministers there will be no extra money to give millions of public sector workers an average 6% pay rise, potentially leaving departments facing a difficult choice between raising salaries or cutting frontline services.

The Guardian understands the chancellor has ruled out providing a further cash injection beyond what is already budgeted if Rishi Sunak decides to implement the recommendations of independent pay review bodies, which are expected as soon as Thursday.

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Tomato crisis hits India as rain ravages crops and prices rise 400%

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Consumers, farmers and even McDonald’s struggle in shortage blamed on irregular weather

Listening to the chatter at Delhi’s vegetable markets, only one question is on everyone’s lips: just how much will a tomato cost today?

Prices of tomatoes, a staple of Indian cooking, have soared by more than 400% in recent weeks as the country has been gripped by a nationwide shortage.

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UK tax cuts unlikely before election, says Jeremy Hunt

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Chancellor calls on firms to tackle high prices as government remains far from pledge of halving inflation to 5%

Jeremy Hunt has said he must “double down” on high prices after admitting a package of pre-election tax cuts this autumn was looking unlikely.

The government would not make moves to “pump billions of additional demand” into the economy, the chancellor added.

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Food inflation starting to fall, says Sainsbury’s as sales rise

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Like-for-like sales up 9.8% in quarter and supermarket says it has put more than £60m into cutting prices of basics

Food inflation is starting to fall, according to the boss of Sainsbury’s, who said shoppers were putting more items in their baskets as it began to cut prices on some basics.

Simon Roberts, the chief executive, said the supermarket was “putting all our energy and focus into battling inflation” as household budgets were “under more pressure than ever”.

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RBA interest rates: banks split on future rate hikes as uncertain economic outlook prompts pause

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Homeowners with a mortgage will be breathing a sigh of relief after RBA paused rate rising at Tuesday’s board meeting

Australian borrowers have had a reprieve after the Reserve Bank paused its interest rate hikes for only the second time in the past 14 meetings, giving the central bank more time to assess the state of the economy.

The RBA left its official cash rate at 4.1% on Tuesday, which is still the highest level in 11 years. Economists had been divided in their forecasts, with about half predicting the pause and the others expecting another 25 basis point increase.

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RBA should pause rate rises as ‘deflationary shock’ sweeps global economy, former board member says

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Warwick McKibbin says Australia’s central bank has been slow to react as supply pressures from Covid and war in Ukraine abate

The Reserve Bank should pause lifting interest rates because a “deflationary shock” is beginning to sweep the global economy, according to the former RBA board member Warwick McKibbin.

The director of the ANU Research School of Economics said it is becoming clear supply shocks from Covid and Russia’s war against Ukraine are abating. However central banks, including Australia’s, have so far been slow to react.

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Banks stick to rate hike predictions – as it happened

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This blog is now closed.

Historical societies say banning hate symbols could impact history preservation

Historical societies are also concerned about the proposal to ban Nazi and Islamic State symbols, AAP reports. They worry it will limit education and the preservation of history, and impact memorabilia value.

Modellers need to be able to purchase these items (and) symbols, let alone the basic right of Australian citizens to partake in the legitimate hobby of collecting modelling military items.

The words inscribed on the Islamic flag are sacred words and written by Muslims on a daily basis.

These words are taken directly from our scripture, the Holy Quran, and therefore cannot be subject to a ban.

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Bank of England’s quantitative easing scheme let ‘inflation take root’

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UK economy became reliant on cheap money due to the Bank’s actions, warns former permanent secretary to the Treasury

The Bank of England’s quantitative easing money-printing programme enabled high inflation to take root in Britain, while creating “windfall gains” for the rich, a former Treasury mandarin has warned.

Nick Macpherson, who was permanent secretary to the Treasury under the last Labour government and during David Cameron’s premiership, said the central bank’s £895bn bond-buying stimulus programme had gone “too far” and made the inflation shock hitting Britain worse.

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Shop price inflation easing, say top UK retailers before key meeting with MPs

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British Retail Consortium says figure eased to 8.4% in June from 9% in May

Britain’s biggest retailers have said shop price inflation is easing ahead of a crunch meeting with MPs on Tuesday over the soaring cost of groceries, but warned food prices were continuing to rise at near record rates.

The British Retail Consortium (BRC) said annual inflation in overall shop prices eased to 8.4% in June, down from 9% in May, as retailers cut the price of many staples including milk, cheese and eggs. Clothing and electrical goods prices also fell ahead of the summer holidays.

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Primark owner upgrades profit outlook as inflation fuels jump in sales revenue

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Associated British Foods says group sales rose by 16% with Primark saying rises supported by steeper prices

The owner of Primark and food brands including Twinings has upgraded its profit forecast for this year as sales revenue jumped thanks to inflation-fuelled price increases and as shoppers bought summer clothes.

Associated British Foods, which also owns brands including Ovaltine as well as a sugar business, said that group sales rose by 16% to £4.7bn in the three months to 27 May. Sales at Primark were up by 13% to nearly £2bn.

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Union fury at reports Sunak might overrule some public sector pay rises

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Recommendations from independent pay review bodies could be rejected by PM if he deems them unaffordable

Unions have expressed outrage over reports the prime minister plans to block public sector wage increases owing to fears about pushing up UK inflation, which remains worse than in other leading economies.

Recommendations from the independent pay review bodies could be overruled by Rishi Sunak if they are considered unaffordable, the Times reported, because of concerns they could set off a “wage-price spiral”.

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Ever-higher mortgage rates will leave Rishi Sunak feeling low

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Tories are likely to bear the brunt of homeowning voters’ anger in marginal constituencies in next year’s election

As the former chancellor who warned presciently during last summer’s leadership contest that Liz Truss would crash the economy, Rishi Sunak’s calm competence was meant to be his key electoral selling point.

But after Thursday’s half-point rate rise by the Bank of England left thousands of voters facing eye-watering mortgage hikes, a shirt-sleeved Sunak was reduced to insisting he was “totally, 100% on it” when it comes to fighting inflation.

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Bank of England faces flak as economic history fails to repeat itself

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Critics say Bank should pay less attention to economic models and more to what is happening on the ground

With Thursday’s 0.5 percentage point increase in interest rates to 5%, the Bank of England is hoping to land a knockout blow against inflation.

The latest hike is an admission that 12 rises over more than 18 months have not been enough to tackle the problem. Or, as the minutes said, the impact of shocks from Covid and the energy price crisis “were likely to take longer to unwind than they had done to emerge”, adding that the risks of inflation remaining high “were skewed to the upside”.

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Labour piles pressure on Sunak with plan to prevent ‘mortgage catastrophe’

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Shadow chancellor Rachel Reeves says party would force banks to take a range of steps to protect borrowers

Labour has piled further pressure on Rishi Sunak to take action to help struggling mortgage holders as the Bank of England prepares to raise interest rates again to levels not seen since before the 2008 financial crash.

Rachel Reeves, the shadow chancellor, said on Wednesday that if Labour were currently in power, it would force banks to offer a range of support to borrowers, including letting them move on to interest-only mortgages and extending their repayment period.

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Golden nuggets: KFC price hikes in Australia outpace McDonald’s with some products up to 25% dearer than a year ago

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Higher-than-inflation rises add to pressure on consumers facing steep price increases for food

KFC is pushing up prices at its Australian stores at a faster pace than its rival McDonald’s, with consumers paying up to 25% more for some of the fast food chain’s most popular items, new analysis shows.

The higher-than-inflation hikes add to the mounting pressure on consumers facing steep price rises for food, irrespective of whether it is sold through a drive-through window or supermarket checkout.

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Why is inflation in the UK worse than in other major economies?

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While the rate has fallen from its October peak of 11.1%, the figure for May is expected to stay stubbornly high

UK inflation is expected to have remained stubbornly high in May despite a string of forecasts earlier this year predicting a sharp fall in response to tumbling energy prices.

Official figures are expected to show on Wednesday that the UK’s consumer prices index (CPI) eased slightly last month, to 8.4%, from 8.7% in April.

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Grocery inflation in Great Britain eases to 16.5% but remains high

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Supermarket inflation slows to lowest rate this year, although households still under pressure

Supermarket inflation in Great Britain has eased to its lowest level this year but remains high, forcing people to change how they eat and cook as household budgets are strained, according to the data firm Kantar.

Grocery inflation declined to 16.5% in the four weeks to 11 June, down from 17.2% last month and a record 17.5% in March. It remains at its sixth-highest level since the financial crisis in 2008, Kantar said.

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Sunak, Hunt and homebuyers brace for an economic Big Wednesday

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The midweek inflation bulletin could be the most significant piece of government data published this year

This Wednesday will mark the longest day of the year and not long after the sun comes up the Office for National Statistics (ONS) will publish its latest cost of living bulletin. To say the data is eagerly awaited is an understatement. There is unlikely to be a more significant piece of official data released in the current parliament.

The reason is simple. Despite raising interest rates 12 times since December 2021 in an attempt to quell upward price pressures, inflation is proving harder to shift than the Bank of England imagined.

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Tesco boss: food inflation has probably peaked but prices will stay high

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Ken Murphy says higher costs of grocery imports because of Brexit are partly to blame for rising prices

The chief executive of Tesco has said food inflation has probably peaked but warns that prices are likely to stay high.

Ken Murphy, the head of the UK’s biggest supermarket chain, said the price of milk, bread, cooking oil and some vegetables such as broccoli had come down this month but inflation continued in other essentials, including rice and potatoes, as aweather issues and locked-in increases in the price of labour and energy continued to bite.

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‘I’m left with nothing’: Nigerians feel brunt of economic shakeup

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President Tinubu’s policies please foreign investors, but a devalued currency and soaring petrol prices mean ‘national sacrifice mode’ is widely unpopular

Nigerians are feeling the strain as their new president pushes through a series of unpopular policies that have earned him praise from foreign investors.

Bola Tinubu, who was sworn in on 29 May, has surprised many observers by taking a running start to his tenure of Africa’s most populous country. In little over two weeks he has banished a longstanding petrol subsidy, ejected the country’s central bank governor and ended restrictions on the rate of the naira, Nigeria’s currency.

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