Category Archives: Inflation

Risk of UK recession at next general election is 60%, says thinktank

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Economic experts say it will take until third quarter of 2024 for output to return to pre-pandemic peak

Rishi Sunak will fight the next election against a backdrop of an economy suffering from five years of lost growth and a widening of the gap between the prosperous and less well off parts of Britain, a leading thinktank said on Wednesday.

The National Institute of Economic and Social Research (NIESR) said it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak and that there was a 60% risk of the government going to the polls during a recession.

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UK retailers forced to slash prices after July washout and interest rate rise

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British Retail Consortium and KPMG report shows steep annual drop in volume of sales and a rise in promotional offers

Britain’s hard-pressed retailers are being forced to slash their prices to drum up business after dismal summer weather and ever-higher interest rates combined to depress consumer spending in July.

The monthly health check of high street and online spending patterns from the British Retail Consortium and the consultancy KPMG reported a steep annual drop in the volume of sales and an increasing number of retailers offering promotional offers to woo consumers reluctant to part with their cash.

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Fears of food inflation rise as UK harvests hit by cool, wet summer

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Farmers warn wheat, oilseed rape, potatoes and other crops have been affected after wettest July on record

UK farmers have warned that harvests of wheat, oilseed rape, potatoes and other crops have been hit by the cool, wet summer, raising fears of further food price inflation.

The wettest July on record for parts of the UK risks colliding with rising prices of essential ingredients on global markets due to the ongoing conflict in Ukraine and unpredictable weather affecting harvests from southern Europe to China.

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More pain in store – tough-talking Bank raises UK interest rates and a few eyebrows

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Rise to 5.25% comes as no surprise but Bank of England’s language will frighten many

If it isn’t hurting it isn’t working. That was the message from John Major, then chancellor, in 1989 during a previous period when interest rates were being used to combat high inflation. And it was the message rammed home by the Bank of England on Thursday.

Any hard-pressed households or struggling business looking for comfort from Threadneedle Street would have been disappointed by news that the pain will continue and is likely to intensify. Interest rates may not yet have peaked.

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Bank of England warns interest rates will remain high for at least two years

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Policymakers vote for quarter-point rise to 5.25% – the 14th hike in a row – but BoE rules out prospect of recession

The Bank of England has warned businesses and households that the cost of borrowing will remain high for at least the next two years as it raised interest rates for the 14th consecutive time to 5.25%.

Ruling out the likelihood of a recession over the next two years, policymakers blamed strong wages growth in recent months for the need to increase interest rates by 0.25 percentage points to the highest level for 15 years.

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UK shop prices in first monthly fall for two years amid big discounts

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Clothing and footwear among items reduced most in July as retailers try to counter bad weather

The UK’s biggest retailers have reported the first monthly fall in shop prices for two years, as stores tried to tempt in customers with big discounts during July’s unseasonably wet weather.

The British Retail Consortium (BRC) said its annual shop price inflation rate, compiled with the help of NielsenIQ, had declined to its lowest level of the year, sliding to 7.6% last month from 8.4% in June.

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UK interest rates need to stay higher for longer to beat inflation, says IMF

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US Fed will also have to raise rates more aggressively than forecast, says Washington-based body

Interest rates in the UK will need to stay higher for longer than previously forecast in order to tackle stubbornly high inflation, the International Monetary Fund has warned.

The IMF’s regular update on the state of the global economy singled out the US Federal Reserve and the Bank of England as two central banks that will need to raise official borrowing costs more aggressively than it assumed only three months ago.

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India’s ban on rice exports raises fear of global food price rises

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Attempt to curb domestic inflation behind country’s decision on non-basmati white rice

India has banned non-basmati white rice exports to curb domestic inflation, raising fears of further increases in global food prices just days after wheat and corn prices were sent climbing by Russia’s termination of a key grain deal.

The immediate ban, introduced after heavy rains hit domestic crops, follows the failure of a 20% duty on international exports introduced in September to curb foreign demand, which has soared after extreme climate conditions hit production in countries.

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Exceedingly good news? Mr Kipling owner says UK food inflation has peaked

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Premier Foods reports 21% rise in sales but pledges no more price rises this year

The maker of Mr Kipling cakes, Oxo cubes and Bisto gravy granules has said it believes recent food cost inflation has peaked, and it is not planning any more price rises for its food products for the rest of the year.

The news came as owner Premier Foods reported a 21% increase in sales in the first quarter of the financial year, compared with a year earlier.

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Asda’s profit margins at the pump have trebled, MPs told

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Competition regulator tells business committee of ‘significant change’ in retailer’s fuel pricing

Asda’s profit margins on fuel have tripled since before the pandemic, according to the competition regulator at a bad-tempered parliamentary hearing where the supermarket chain’s co-owner repeatedly refused to explain its pricing strategy.

Mohsin Issa declined to answer multiple questions on whether Asda had increased its profit margins on fuel since its takeover in 2021, prompting MPs on the business select committee to become increasingly furious as the retailer insisted it had not changed its strategy.

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How Britain became the G7’s inflation outlier – in one chart

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This week’s CPI figures look set to highlight a trend: that prices in the UK seem to rise faster than they do elsewhere

The UK has a longstanding problem with inflation. Since the 2008 banking crash, bouts of inflation felt across the world have sent prices higher in the UK than its G7 rivals.

In July 2009, during the recession that followed the banking crisis, UK inflation was 3.1 points above the G7 average. Two years later, when recovery sent oil prices soaring, it stood about 2% above the G7 average. In March this year, however, it stood a full 3.5 points above the G7 level.

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UK supermarket food prices up by more than 25% in two years, says Which?

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Retailers should be forced to display detailed price information on loyalty card deals, says consumer group

Supermarket food prices have increased by more than 25% over the past two years according to the consumer group Which?, with the size of the rise reinforcing the case for retailers to be forced to display detailed price information on loyalty card offers and promotions so shoppers can find the best deal.

Which? said the government needed to close loopholes that result in “confusing and inconsistent” pricing practices of some supermarkets. Last month it reported Tesco to the UK’s competition watchdog because it does not provide unit prices – such as the price for each 100g or 100ml – for the loyalty card offers it uses as a sales tactic to pull in shoppers.

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Where to next for the Australian economy, the RBA – and Philip Lowe?

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The Reserve Bank governor will soon find out if his term has been extended – but economic hints from major banks tell a happier story than expected

Philip Lowe may yet go down as one of the unluckiest central bank governors in Australian history or perhaps elsewhere.

Within a few days, the treasurer, Jim Chalmers, will decide on whether to extend the Reserve Bank governor’s seven-year contract when it concludes in mid-September. Few expect Lowe will get the nod to stay on.

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Australia news live: ANZ says customers ‘by and large are faring extremely well’ despite interest rates squeeze

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Follow the day’s news live

A student on New South Wales’s Central Coast has died after contracting the influenza virus, just days after NSW chief health officer Kerry Chant warned circulation of influenza B was rising and young people were at heightened risk from the strain.

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Having a budget which is in much better nick means that if at some future point – and we’re not contemplating additional measures right now – but at some future point if we need to, we do that from a much more solid foundation. And that’s because we’re managing the budget so responsibly.

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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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