Category Archives: Inflation

Jacob Rees-Mogg accuses Bank of England of ‘miserable incompetence’ over inflation

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MP criticises policies on interest rates and bond-selling as Tory rightwingers call for review of Bank’s independence

Jacob Rees-Mogg has accused the Bank of England of “miserable incompetence” over its failure to reduce inflation more quickly and its bond-selling strategy, as rightwing Tories prepare to renew their attacks on the Bank’s independence.

The former business secretary accused the Bank of damaging the economy with its interest rate decisions and costing the taxpayer tens of billions of pounds by selling off government debt too quickly in an attempt to reduce its balance sheet – a policy known as quantitative tightening (QT).

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Jim Chalmers flags cost of living help for job seekers in federal budget

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‘There is more than one way to help people who are on income support,’ treasurer says when suggesting rebates and concessions could be boosted

The federal government is poised to expand rebates and concessions available to job seekers in next week’s federal budget, which is also expected to increase rent assistance.

The treasurer, Jim Chalmers, has confirmed that Tuesday’s budget will not increase the jobseeker payment but suggested it would boost concessions linked to social security payments, among a suite of measures designed to offer cost-of-living relief without pushing up inflation.

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Bank of England keeps interest rates at 5.25% but hints at a June cut

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Policymakers say they want to see more evidence that price pressures are easing before cutting rates

• Business – live

The Bank of England has signalled it could start cutting interest rates as early as June after inflation was found to be “moving in the right direction”, as it kept borrowing costs on hold at 5.25% for the sixth time in a row.

Alongside the decision to keep rates on hold, the Bank said inflation was already on course to hit its target of 2% and would fall to just 1.6% in two years, opening the door to future cuts in interests.

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Germans grill Olaf Scholz over soaring cost of doner kebabs

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Die Linke party is among those calling for a Dönerpreisbremse or price cap on the hugely popular street food

The soaring cost of doner kebabs has led to growing calls in Germany for a government subsidy programme to keep the inflation-hit dish, one of the country’s favourites, affordable as politicians report it is frequently cited as a concern in doorstep conversations with voters.

The chancellor, Olaf Scholz, has become so used to being asked about the price of kebabs during public appearances that his government has even posted on social media to explain that price rises are in part due to rising wage and energy costs. “It’s quite striking that everywhere I go, mainly from young people, I’m asked whether there shouldn’t be a price brake for the doner,” Scholz has said.

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Thames Water collapse could trigger Truss-style borrowing crisis, Whitehall officials fear

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Exclusive: Concerns over effect on UK’s finances lead officials to believe utility should be renationalised before general election

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

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Oil price could exceed $100 a barrel if Middle East conflict worsens, World Bank warns

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Increase in cost of crude could drive inflation up and force central banks to keep interest rates high

• Business live – latest updates

A serious escalation of tensions in the Middle East would push the price of oil above $100 (£80) a barrel and reverse the recent downward trend in global inflation, the World Bank has said.

The Washington-based institution said the recent fall in commodity prices had been levelling off even before the recent missile strikes by Iran and Israel – making interest rate decisions for central banks tougher.

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Australia’s inflation rate slows less than expected to 3.6%, dimming hopes of interest rate relief

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Economists had tipped CPI growth for the March quarter of 0.8%, and an annual inflation rate of 3.5%

Australia’s inflation rate slowed less than expected in the March quarter, dimming hopes the cost of living crunch was easing and chances of a 2024 cut in official interest rates.

The consumer price index for the first three months of 2024 was 3.6%, slowing from the 4.1% annual pace in the December quarter, the Australian Bureau of Statistics said on Wednesday. Economists had tipped CPI would drop to 3.5%.

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Most difficult global outlook since 1930s heralds end of US-led world order | Larry Elliott

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IMF has revised up growth forecasts but medium-term prospects remain poor as globalisation goes into reverse

The 2020s are almost halfway over and are on course to be the most difficult decade for the global economy since the 1930s. Every finance minister and central bank governor at the spring meeting of the International Monetary Fund in Washington last week knows that, even if they were not prepared to admit it publicly.

The IMF likes to look on the bright side. It revised up slightly its forecast for global growth and now thinks scarring from the coronavirus pandemic and the cost of living crisis will be less severe than it originally feared. Interest rates have risen without triggering the recessions that were predicted. A soft landing has been finessed. The performance of some countries – the US and India to take two examples – has been strong.

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Middle East conflict risks sharp rise in oil prices, says IMF

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In the UK, anxiety over the crisis after Iran’s missile strike on Israel drives down UK shares

An escalating Middle East conflict risks leading to higher oil prices, a reversal of the recent fall in inflation and a puncturing of the optimistic mood in financial markets, the International Monetary Fund has warned.

The Washington-based IMF said it was closely monitoring events in the region after Iran’s missile strike on Israel at the weekend and stressed the possibility that a war between the two countries could lead to higher interest rates.

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Interest rates need to stay higher for longer, says Bank of England policymaker

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Megan Greene dampens hopes of August cut while underlying causes of inflation remain ‘persistent’

Cuts in UK interest rates should be “a way off”, according to a Bank of England policymaker, who has said that inflationary pressures will keep the cost of borrowing higher than financial markets expect.

Megan Greene, a member of the Bank’s nine-member monetary policy committee (MPC), which sets interest rates, said financial markets were betting “in the wrong direction” when they judged how quickly the central bank would make its first rate cut.

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Food inflation in world’s rich nations falls to pre-Ukraine war levels

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Rate declines for 15th consecutive month across 38 OECD countries from 6.3% in January to 5.3% in February

Food prices across the world’s richest nations rose in February at the slowest rate since before the Russian invasion of Ukraine, according to figures that show easing inflationary pressures on households.

The Organisation for Economic Co-operation and Development (OECD) said food inflation declined for the 15th consecutive month across its 38 member countries from 6.3% in January to 5.3% in February.

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Energy bills: standing charges are not standing still

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Despite a 12.3% cut in April’s energy price cap, there is an important fixed element in your bill that is rising again

“Great news! Your unit rates are going down.” E.ON’s letter to customers starts with glad tidings – but, as it soon admits, there is an element of their bills that is set to go up in most parts of the country.

Despite a headline cut of 12.3% in April’s energy price cap, yet again standing charges are rising. In E.ON’s case, on its Next Flex tariff, electricity charges are due to rise from 62.205p to 67.9041p – an increase of just over 9% – while for gas, charges go up from 29.595p to 31.894p (up almost 8%).

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UK government borrowing higher than expected in February

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Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole

Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.

The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.

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Next cheers retail sector with bumper profits and talk of falling prices

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Shares hit new high as chain says consumer backdrop is improving and ‘feels like it is now entering a new era’

Next said the prices it charges customers are falling this year, as the fashion and homeware retailer reported bumper profits and said the UK consumer backdrop was improving.

Simon Wolfson, the group’s chief executive, said that it had been “a long time” since the group had started a financial year in such a positive frame of mind after the positive sales and growth results for the year to January.

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Fed leaves interest rates unchanged but signals three cuts this year

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Rates to stay at 25-year high of 5.25% to 5.5% as central bank says ‘inflation has eased over the past year but remains elevated’

The Federal Reserve announced on Wednesday that it would leave US interest rates at a 25-year high as it continues to assess their impact on cooling inflation and the wider economy.

After a two-day meeting, the Fed announced rates would be unchanged at 5.25% to 5.5%, where they have been since July. But the Fed signaled it still expects to cut rates three times this year.

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Vinyl records return to UK ‘inflation basket’ for first time since 1992

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Strong sales of Taylor Swift’s 1989 (Taylor’s Version) help format make an impact, as air fryers also join list

Not since Simply Red’s album Stars topped the albums chart in 1992 have vinyl records been included in the basket of goods used to calculate annual inflation, but a rise in sales over recent years has brought them back as a marker of UK shop prices.

The Office for National Statistics said the “resurgence of popularity” in vinyl records meant they should be included among the 744 items used to calculate inflation each month, in its latest annual shake-up of the basket.

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Bitcoin hits new record high above $70,000; US investor ends Currys chase – business live

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Live, rolling coverage of business, economics and financial markets as exchange-traded funds help biggest cryptocurrency rally

The European Commission’s use of Microsoft email and office software broke its own privacy rules, an EU privacy watchdog has ruled.

Microsoft’s software transferred personal data outside the EU, breaching privacy rules, according to the European Data Protection Supervisor.

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Cookie Monster and Ohio senator make odd allies in shrinkflation complaint

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Democratic senator Sherrod Brown endorsed the Sesame Street star’s complaint on products getting smaller as prices remain same

The Ohio Democratic senator Sherrod Brown endorsed a key voice in the American public square – Cookie Monster – in a complaint about shrinkflation.

“Me hate shrinkflation!” the Sesame Street character posted on social media on Monday, referring to an economic phenomenon Merriam-Webster defines as “the practice of reducing a product’s amount or volume per unit while continuing to offer it at the same price”.

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Deal allows police to march in parade – as it happened

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This blog is now closed.

On the “broken promise” of changing the stage-three tax cuts (the latest Guardian Essential poll had Albanese falling in the trust stakes) the prime minister said:

We made not an easy decision. We made the right decision for all the right reasons. We know that families are under cost of living pressure.

The idea that we could sit back and ignore the clear recommendations that this was the best way that we could have an impact on providing that assistance to middle Australia without putting upward pressure on inflation – we couldn’t ignore that.

This is just a terrible incident that’s occurred here. The loss of the two young men and I feel for the grieving of the family, the friends. They obviously were full of life, because so many people interacted with them. It’s a really tough day for, as well, the queer community, and it’s been a very difficult time.

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UK grocery price inflation falls to two-year low amid supermarket price war

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Competition helped offset impact of Red Sea shipping crisis in February, says analyst Kantar

Grocery price inflation in the UK has slowed to a two-year low as fierce competition among supermarkets offset the impact of the Red Sea shipping crisis on goods prices.

In a boost to households, supermarket prices were 5.3% higher than a year earlier in February, the lowest rate since March 2022 and down from January’s 6.8%, according to the analyst Kantar. Grocery sales grew by 5.1% in the four weeks to 18 February.

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