Category Archives: Inflation

Tesco warns of cost inflation as it raises pay for third time in 13 months

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Supermarket aims to make £500m of savings but will freeze prices on more than 1,000 products until 2023

Tesco has warned annual profits will be at the lower end of its hopes as it faces significant cost inflation, revealing it has raised pay for a third time in 13 months.

The UK’s biggest retailer said it was aiming to make £500m of savings this year to offset its higher costs, including more automated tills, but was uncertain how shoppers would behave in the run-up to Christmas.

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Treasury watchdog to ask Kwarteng to hand over growth forecasts

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Tory chair Mel Stride says watchdog needs to hear how chancellor will boost growth, and suggests one option might be via immigration

Kwasi Kwarteng will be called before parliament’s Treasury watchdog and asked to hand over independent growth forecasts, as its chairman said there is “not a very broad path” out of the current economic situation.

Mel Stride, a Conservative MP and chair of the Treasury committee, said Kwarteng was “very, very unlikely to reverse” the £45bn of unfunded permanent tax cuts he announced last Friday, even though that is an option. The alternative, he said, was to act quickly to “demonstrate to the markets that growth is realistic”. The third option would be deep cuts to public spending, but that would be difficult given the current pressure of inflation, Stride said.

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Cost of using electric car charging point in UK up 42% since May

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Soaring energy prices after invasion of Ukraine have added almost £10 to cost of charging family-sized car, says RAC

The price of charging an electric car using a public rapid charger has jumped by almost £10 since May because of soaring energy costs after Russia’s invasion of Ukraine.

The increased price of wholesale gas and electricity has pushed up the price to charge an average family-size car by 42% to above £32, according to analysis by the RAC. That was £9.60 more than in May, and £13.59 more than a year earlier.

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Mini-budget 2022: pound crashes as chancellor cuts stamp duty and top rate of income tax – live

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Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal

There are no urgent questions in the morning, and so Kwasi Kwarteng, the chancellor, will be delivering his statement soon after 9.30am.

The Commons starts sitting at 9.30am, but they always begin with prayers in private, and so Kwarteng will be up a few minutes later.

The last time they did it one third of the beneficiaries were people buying second homes or buy to let, so we are sceptical that this is the magic bullet to increase homeownership. What we really need to do is to build more houses and to help get people onto the property ladder by increasing the supply of housing.

When this has been done before, it has often fuelled an already hot market and many of the beneficiaries have been people buying a second or third home, rather than the first time buyers that we really want to help who are often trapped in private rented accommodation where they’re paying as much in rent every month as they would in a mortgage.

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UK in recession and further interest rate hikes probable, Bank warns Kwarteng

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Threadneedle Street makes clear on eve of tax-cutting mini-budget that plans risk triggering more rate rises

The Bank of England has warned Kwasi Kwarteng the economy is in recession and it will most probably need to push interest rates higher after Friday’s tax-cutting mini-budget.

On the eve of a major package of support from the chancellor designed to break what he called the economy’s “cycle of stagnation”, Threadneedle Street said the UK economy was heading for a second consecutive quarter of falling output, with gross domestic product set to shrink 0.1% in the three months to September.

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Fed raises interest rate by 0.75 percentage points as US seeks to rein in inflation

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Third outsized rate increase in a row as central bank struggles to fight runaway inflation, increasing the cost of everything

The Federal Reserve announced another sharp hike in interest rates on Wednesday as the central bank struggles to rein in runaway inflation.

The Fed raised its benchmark interest rate by 0.75 percentage points, the third such outsized rate increase in a row, bringing the Fed rate to 3%-3.25% and increasing the cost of everything from credit card debt and mortgages to company financing.

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Bring back eviction ban or face ‘catastrophic’ homelessness crisis, ministers told

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Sir Bob Kerslake calls on government to protect at-risk tenants as it did during pandemic

The former head of the civil service has warned of a looming “catastrophic” homelessness crisis caused by the cost of living unless the government reintroduces the eviction ban that protected tenants during the Covid-19 pandemic.

Sir Bob Kerslake, who chairs the Kerslake Commission on Homelessness and Rough Sleeping, said a failure to act “could see this become a homelessness as well as an economic crisis and the results could be catastrophic; with all the good achieved in reducing street homelessness since the pandemic lost, and any hope of the government meeting its manifesto pledge to end rough sleeping by 2024 gone”.

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World Bank warns higher interest rates could trigger global recession

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Study says global economy is in steepest slowdown after a post-recession recovery since 1970

The world may be edging toward a global recession as central banks simultaneously raise interest rates to combat persistent inflation, the World Bank has warned.

The three largest economies, – the US, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession”, the bank said in a study.

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John Lewis suffers first half loss of £99m and warns of risk to staff bonuses

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Outlook ‘uniquely uncertain’, says Partnership as it announces cost of living support for staff

The John Lewis Partnership has warned its annual staff bonus is at risk this year after it slumped to a first half loss of £99m and said the outlook in the run-up to Christmas was “uniquely uncertain”.

The group, which is staff-owned and includes the Waitrose supermarket chain, blamed soaring inflation for the loss in the 26 weeks to 30 July, which compared with a £29m loss before tax in the same period last year.

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Bank of England will not take foot off throttle despite drop in inflation

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MPC members will look at other developments in UK and abroad in mission to increase interest rates

The drop in inflation from 10.1% in July to 9.9% last month is not going to trouble the Bank of England’s policymakers when they meet next week to set interest rates. Its monetary policy committee (MPC) is on a mission to increase the cost of borrowing to bring down inflation to 2%. Prices growth that sticks at almost 10% is still too high. One month’s figures are not a trend.

The nine MPC members will also ponder several other developments at home and abroad that can be considered reasons to increase interest rates.

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RBA governor says at least two more interest rate rises needed to combat ‘scourge’ of inflation

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Philip Lowe has admitted ‘the magnitude of the pickup in inflation has come as a surprise to everyone’

The Reserve Bank will need to lift the official interest rate at least twice more to ensure the “scourge” of inflation is contained, with the pace and size of increases determined in part by how fast wages pick up, the bank’s governor, Philip Lowe, has warned.

In a speech on Thursday, Lowe admitted the pace of inflation had caught the RBA and other central banks flatfooted. They had no choice but to lift the cost of borrowing to stop an “inflation psychology” from taking hold.

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UK watchdog to examine whether telecoms companies mislead customers

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Cap says mobile and broadband users must get clear information about inflation-busting bill increases

The UK advertising watchdog has launched an investigation into whether telecoms companies are misleading consumers about inflation-busting bill increases when promoting deals in their marketing campaigns.

Telecoms companies make billions of pounds annually by instituting price rises to mobile and broadband bills midway through contract periods – increases that will add to the biggest squeeze on the cost of living facing households in generations.

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Liz Truss holds first cabinet meeting as Thérèse Coffey denies claim PM put loyalty before competence – UK politics live

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Health secretary says Truss did not focus too much on rewarding friends as new ministers attend first cabinet meeting

According to a report by Jason Groves in the Daily Mail, Liz Truss may announce an end to the ban on fracking this week. During the leadership campaign she said she wanted to allow fracking, but only in areas where there was a clear public consensus in favour.

On the Today programme this morning Lord Deben, the Tory peer who chairs the Committee for Climate Change, said fracking was not a solution to the UK’s energy problems. He explained:

The price of gas is not affected by the relatively small amount that we can get, in addition to the North Sea or indeed from fracking.

This is an international price and we would be paying the same price we got out of the fracked gas as we are for the gas we’re using now.

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Soaring costs could strip ‘basic dignity’ from millions in UK

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Annual income survey finds national minimum wage will often fail to cover even a ‘no frills’ lifestyle

Soaring inflation and energy costs will leave millions of people on low incomes thousands of pounds short of what the public say is the minimum amount needed to live with basic dignity in the UK this winter, according to an annual survey.

The annual Minimum Income Standard study is based on intensive deliberations by groups of socially representative UK residents, who agreed what a normal, no-frills lifestyle would cost and look like in 2022, taking into account housing, food, clothing, household goods, transport and social participation.

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Inflation pushes average cost of filling Panini 2022 World Cup sticker album to £870

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Five-sticker packs for football tournament in Qatar are 12.5% more than for Russia 2018

Inflation has come for the football sticker album. Collecting and completing the official Panini Fifa World Cup Qatar 2022 album will cost fans an average of about £870.

Panini, which first produced a World Cup sticker album for the 1970 tournament in Mexico, has priced five-sticker packs for the Qatar 2022 album at 90p each. That is a 12.5% increase on the 80p cost of a five-sticker pack for the Russia 2018 album. For Euro 2016 a pack cost 50p.

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UK food price inflation hits highest level since global financial crash

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Prices in shops rose by 5.1% in August, British Retail Consortium finds, as the war in Ukraine pushes up prices up for farmers

The rapidly rising price of food including milk, margarine and crisps pushed August shop price inflation to the highest levels since 2008 as the war in Ukraine raised costs for farmers.

Prices in shops rose by 5.1%, a big increase from 4.4% in July, as food producers passed on increases in the cost of fertiliser, wheat and vegetable oils, large amounts of which are produced in Ukraine and Russia, according to data from the British Retail Consortium (BRC) and market research firm NielsenIQ.

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Unions threaten ‘waves of industrial action’ over UK cost of living crisis

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Move could see synchronised strikes in autumn as new prime minister takes office

Britain is facing a wave of coordinated industrial action by striking unions this autumn in protest at the escalating cost of living crisis, the Observer can reveal.

A series of motions tabled by the country’s biggest unions ahead of the TUC congress next month demand that they work closely together to maximise their impact and “win” the fight for inflation-related pay rises.

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Dow plunges 1,000 points after Fed chief Powell warns of inflation ‘pain’

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US stock markets nosedive as Jerome Powell says at top bank summit the ‘overarching focus is to bring inflation back down’

US stock markets nosedived on Friday after Federal Reserve chair, Jerome Powell, warned of “pain” ahead as the central bank struggles to bring down inflation from a 40-year high.

Powell’s highly anticipated speech was more hawkish than had been expected, with the Fed chair pledging to do all he could to end rising prices. The Dow Jones Industrial Average lost just over 1,000 points, 3%, the S&P fell 3.3% and the Nasdaq dropped almost 4%.

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‘I am not blaming anyone’: Estonians shrug off 23% inflation

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Those in Europe’s inflation hotspot remain calm about rising prices, but a lack of government intervention could fuel further increases – and discontent

Like his cappuccinos, Taniel Vaaderpass, 33, isn’t bitter. His usually profitable company, OA Coffee, one of Estonia’s biggest coffee bean roasting companies, may have posted a loss for the first time last year and is set to do so again this year, but Vaaderpass remains strikingly sanguine as he sits on the terrace of the cafe he also owns on a cobbled street in the old town of Tallinn.

The central causes of Vaaderpass’s misfortune is a 240% increase in the price of unroasted green coffee and a 20% surge in the cost of the gas he uses to roast his imported beans. He also felt the need to give his staff a 10% pay rise in January despite the lack of company profits.

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UK consumer confidence weaker than during major recessions

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Monthly look finds deepening pessimism about personal finances and prospects for the economy

Consumer confidence in the UK is weaker than during the four major recessions of the past half century as rapidly rising inflation saps morale.

Although the UK is technically yet to enter recession, the latest barometer of sentiment from the data company GfK found the public gloomier than at any time since the survey began in January 1974.

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