Category Archives: Inflation

Mountain view: Bank top economist offers two routes to beating inflation

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Huw Pill says he prefers longer, more steady use of interest rates of Table Mountain model over sharp rise and fall of Matterhorn approach

Tourist attraction, backdrop to millions of selfies and one of the world’s most easily identifiable landmarks. Cape Town’s Table Mountain is all of these things, but now it has found a new role: as a guide to what will happen to UK interest rates.

For Huw Pill the opportunity was too good to pass up. Invited by South Africa’s central bank to speak at a high-level conference, the Bank of England’s chief economist said there were two ways for Threadneedle Street to bring UK inflation back to the government’s 2% target.

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Fed chair warns US inflation battle not over and hints at further rate rises

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Jay Powell tells symposium in Wyoming that inflation is still too high but that US central bank will ‘keep at it until the job is done’

Federal Reserve chair Jerome Powell used a closely watched speech on Friday to warn that the fight against inflation in the US is not over.

Speaking at the Federal Reserve Bank of Kansas City’s annual gathering of central bankers in Jackson Hole, Wyoming, Powell said inflation was still too high and that interest rates may have to rise further to tamp it down.

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Homebuilder shares tumble as UK housing market weakens – business live

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A profit warning from housebuilder Crest Nicholson has compounded fears of a housing market slowdown, as Rightmove data reveals a further drop in asking prices

AJ Bell investment director Russ Mould said that while weak house price data (as was “hardly a surprise”, Crest Nicholson’s profit warning has “laid bare the the scale of the impact of a housing slowdown on the housebuilding sector.”

Sales of new homes have plunged alarmingly and, while not all developers in the space are created equal, the news, allied to Rightmove’s latest reading on the property market, has had a knock-on effect on share prices in the rest of the sector this morning.

The £7,000 drop in the average asking price observed by Rightmove in the last month, allied to a big drop in transaction volumes, is the kind of statistic to make estate agents distinctly uneasy.

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Sunak suggests plan to stop small boats won’t fully succeed before general election but claims it is working – politics live updates

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Prime minister says he is ‘not complacent’ and figures showing fall in crossings compared with 2022 show his approach is working

Rishi Sunak and Gillian Keegan, the education secretary, were both given a chance to show off their painting skills when they visited a nursery in Harrogate this morning. According to PA Media, they were both painting bees. Keegan’s bee would merit a gold star. Sunak’s looks more like a parrot with a squint.

In his pooled TV interview, Rishi Sunak also stressed the government’s commitment to extending access to free childcare. He said:

It is really important to me that young families have access to high quality affordably childcare. That is why the government is expanding its offer of free childcare.

Currently working families can access 30 hours of free childcare for three and four-year-olds. As part of our big reforms we are extending that all the way down to little ones as young as nine months.

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Inflation spiral: food prices could yet rise higher and may never come down

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Concerns are growing over the effects of a warming climate on production and the danger of high grocery prices getting embedded into Australia’s economy

Food prices have been rising rapidly and there are reasons to fear they will push even higher. Economists warn some prices might never come down.

The ominous outlook is linked to drought conditions wilting crops in major grain-producing nations, disrupted grain deliveries out of Ukraine and moves by governments to ban food exports to protect their own supplies.

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Rishi Sunak accused of being ‘out of touch’ over energy bill support comments – UK politics live

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The Lib Dems criticise the PM after he suggested some people did not realise the government was still providing bill support

John McTernan writes for the Guardian today, calling for Labour to stop being so cautious and make the election a referendum on net zero:

Or nearly everything. Labour currently lacks one vital quality: confidence. While heading for a victory bigger than Tony Blair’s landslide of 1997, the party appears to be too frightened to fight. Whenever the Tories do something profoundly amoral or un-British – such as telling refugees to “fuck off”, as their vice-chair, Lee Anderson, recently did – Labour seems scared of going on the attack.

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Sharp rise in cost of food basics forces UK families ‘to make desperate choices’

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Which? research finds cheese, butter and bread are up by more than 30% in the past two years, hitting the poor hardest

The cost of some basic food items such as cheese, butter and bread has soared by more than 30% in the last two years, forcing poorer households to “make desperate choices between keeping up with their bill payments or putting food on the table,” campaigners have said.

Food price inflation has slowed in recent months, but costs remain much higher than they were two years ago, disproportionally affecting low-income households, according to research by consumer body Which? shared exclusively with the Guardian.

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Nomad Foods sees sharp rise in sales after increasing prices

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Firm says profitability suffered due to post-pandemic inflation and Ukraine war

Nomad Foods, the owner of Birds Eye, Findus and Goodfella’s pizzas, has seen a sharp rise in sales after it increased prices by 18%, amid political scrutiny over food pricing.

The business, which supplies the UK’s major supermarkets, said sales had risen by 8.6% in the three months to the end of June. The number of items sold dropped by 9.4%, but profits rose by 6.8% to €210m.

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China’s economy is struggling but fears of sustained deflation are premature

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Trade with rest of world is shrinking and youth unemployment is at 20% but state interventions are expected

China’s economy is struggling. The recovery after the lifting of Covid-19 restrictions is faltering. Its trade with the rest of the world is shrinking. A decade-long boom in house prices has come to an end.

The most obvious manifestation of the troubles besetting the world’s second biggest economy is that China is now officially in deflation. In the US, the UK and the eurozone, prices are rising – albeit not quite as fast as they were a few months ago – but in China they are actually falling.

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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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