Category Archives: Inflation

Interest rates to keep rising as RBA warns it will do ‘what is necessary’ to curb inflation

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Reserve Bank governor Philip Lowe says half percentage point increases to cash rate possible if economic conditions do not improve

Interest rates will be rising for the foreseeable future and the Reserve Bank of Australia will not hesitate in making higher increases than predicted if inflation does not begin to settle, the RBA governor, Philip Lowe, has warned.

Tuesday’s seventh interest rate hike saw the cash rate increase by the standard quarter of a percentage point, taking rates to a nine-year high of 2.85%, and Lowe said the RBA board would not hesitate to move to half percentage point increases if economic conditions didn’t improve.

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Cost of living crisis: Stop the Squeeze calls for wealthiest to ‘pay proper share’ of tax

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Coalition of 40-plus charities and groups launches amid fears of spending cuts to plug public finances

Pressure is building on the leaders of Britain’s two biggest political parties to support higher taxes on wealth amid growing fears over the impact that a renewed austerity drive would have amid the cost of living crisis.

In an intervention which comes as the new prime minister, Rishi Sunak, considers options for filling a £35bn black hole in the public finances, a new coalition of 40 charities and campaign groups – including Oxfam, Save the Children and Christians Against Poverty – said Britain’s tax system was broken and those who paid the most should “pay their proper share”.

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Bank of England left in the dark ahead of new interest rate decision

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With fiscal statement deferred and mixed government messaging on tax and spending the BoE has little to go on

The Bank of England will next week consider how much to raise interest rates without having received any guidance from the government about its tax and spending policies, after Jeremy Hunt pushed back the date for this year’s “autumn statement”.

Its policymakers meet on 3 November to decide the increase in the cost of borrowing required to tackle a rate of inflation that climbed above 10% in September.

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UK economic outlook downgraded to ‘negative’ by rating agency

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Moody’s say downgrade from ‘stable’ was driven by political instability and high inflation

The UK’s economic outlook has been downgraded from “stable” to “negative” by the rating agency Moody’s because of political instability and high inflation.

Moody’s said the change in outlook was driven by “heightened unpredictability in policymaking amid weaker growth prospects and high inflation” and “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility”.

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One in 7 Britons skipping meals in cost of living crisis, says TUC

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UK heading for ‘Victorian levels of poverty’ unless pay and benefits rise with inflation, says union body

One in seven people in the UK are skipping meals or going without food, according to new polling data released by the Trades Union Congress (TUC).

The data from an MRP poll by Opinium reveals that more than half of British people are cutting back on heating, hot water and electricity in the cost of living squeeze, and one in 12 have missed the payment of a household bill.

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Australian fuel prices likely to rise as Opec+ countries cut oil production to ‘squeeze the market’

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Cuts by world’s biggest petrol producers will work against other governments’ efforts to tame inflation by releasing fuel stocks

Australian motorists could be hit by higher petrol prices as the world’s largest oil exporting nations cut production, analysts say.

The Australian government reinstated the full fuel excise tax in September after the Morrison Coalition government introduced a temporary, six-month cut to lower the cost of fuel at a time of rising inflation.

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Broadband customers face up to 14% hike in bills, warns Which?

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BT customers face £113 rise as providers such as EE and TalkTalk prepare controversial ‘inflation-plus’ mechanism

Broadband bills could surge by as much as £113 next year if a number of the UK’s biggest telecoms firms push ahead with inflation-busting price increases next spring, says consumer watchdog Which?

Many of the country’s main internet providers – including the largest player BT, along with TalkTalk, EE, Plusnet and Vodafone – use a mechanism to increase the cost of bills annually by the rate of inflation as measured by the consumer prices index (CPI) in January, plus 3.9%.

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For the love of cars: will steep gas prices stall Democrats’ midterm hopes?

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Economy in focus: America has a love affair with cars – but soaring prices are causing a rift. In the midwest, Adam Gabbatt asks voters what they think

The Henry Ford museum, in Dearborn, Michigan, is a tribute to America’s obsession with the motor vehicle.

The sprawling complex, set across 12 acres, is home to early examples of the Ford Model T, the mass-produced, affordable vehicle that set the US on the path of a car-dominant culture, as well as other era-defining vehicles right up to today.

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Poorer families risk £1,000 hit from earnings-related benefits rise

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Below-inflation rise would save exchequer tenth of £40bn to be given out through tax cuts, says thinktank

If the government raises benefits in line with earnings rather than inflation next year, it would drastically cut the incomes of poorer working-age families, while saving less than a tenth of the cost of recent tax cuts, a leading economic thinktank has calculated.

Such a change, which would mean a significant real-terms cut given that wages are rising at 5.5% with inflation close to 10%, could see the effective income of some families reduced by up to £1,000 a year, the Resolution Foundation said.

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Kwarteng considers extending mortgage guarantee scheme

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Initiative may continue beyond December as bank bosses raise concerns over mortgage market

The chancellor is considering extending the government’s mortgage guarantee scheme after UK bank bosses raised concerns over the state of the UK’s mortgage market at a high-level meeting at No 11 Downing Street.

The meeting on Thursday – which was attended by chief executives including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, HSBC UK’s Ian Stuart, Mike Regnier of Santander and TSB’s Robin Bulloch – was scheduled amid mounting fears about the potential fallout from rapidly rising mortgage rates.

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Nurses across UK to vote in first ever RCN strike ballot over pay

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Major disruption to NHS over winter feared if ballot of 300,000 staff over 5% pay increase results in industrial action

Hundreds of thousands of nurses across the UK are to be balloted about going on strike in a move that risks disrupting the NHS this winter.

For the first time in its 106-year history the Royal College of Nursing (RCN) is balloting 300,000 of its members about strike action and recommending that they vote in favour.

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Fears grow over oil price as Opec+ agrees to bigger than expected output cuts

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Cartel curbs production by 2m barrels a day despite strong US pressure, further squeezing supplies

The Opec oil cartel and its allies have agreed to a bigger than expected cut in oil production targets despite significant pressure from the US.

The Opec+ group of oil-producing nations signed up to a cut in output of 2m barrels a day, surpassing predictions earlier in the week of cuts of 1m to 1.5m barrels, squeezing supplies in a tight market.

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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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