Prices up 3.1% on a year ago, with fresh food prices in particular rising sharply, figures showShop prices have hit their highest rate of inflation in almost 14 years as businesses grapple with soaring supply chain costs and a cut in household spending, figures from the British Retail Consortium (BRC) show.They were up 3.1% on a year ago in June, up from 2.8% in May – the highest rate of inflation since September 2008, according to the BRC-NielsenIQ shop price index. Continue reading...
UK’s biggest chemist to stay with Walgreens Boots Alliance as market turmoil makes debt-funded takeovers difficultBoots will remain under the ownership of Walgreens Boots Alliance after the US pharmacy company abandoned a sale of Britain’s biggest chemist.Walgreens has been looking to sell Boots and its related No7 Beauty brand since the end of last year, with a formal review of its options beginning in January. However, on Tuesday it pulled the sale, blaming global financial market conditions which meant potential buyers were struggling to borrow enough money. Continue reading...
As inflation soars, the Fed, ECB, Bank of England and others are more regularly challenged than in the pastWho would want to be responsible for monetary policy in 2022? To judge from the fierce economic and political debates under way around the world, it is as though open season has been declared on central bank governors: they are being criticised from all sides.The US Federal Reserve chair, Jerome Powell, and his colleagues are accused of failing to spot the early signs of an inflationary threat last year. As late as last autumn, they were arguing that price rises were “transitory”. With annual US inflation today approaching double figures, that looks to have been a poor judgment. But now that the Fed has acknowledged its mistake and is raising interest rates, many accuse it of choking off the post-pandemic recovery, collapsing equity and bond markets, and precipitating a recession. Continue reading...
Reluctant to raise prices, refusing to sacrifice profits, travel companies, retailers and restaurateurs are cutting corners wherever they can, usually without telling their customers. Is poor quality the new normal?Did your flight get cancelled in the school holidays? Has the delivery of your new sofa been delayed? Was your last meal out disappointing? Are your new socks see-through? Are you reading this while you are on hold to customer services? Does everything feel just a little bit worse?The cost of living crisis has given British households a crash course in the misery caused by inflation, which is scaling heights not seen since the 1980s. But what if there is also another force at work in the economy, lurking in the background and making a bad situation that little bit grimmer? Continue reading...
Scott Wilson, Kathleen Roberts, Dr Rhys Jenkins and Richard Hyman on the hardship of having to live on a low state pensionI was disappointed to see Nils Pratley (The chancellor’s position on lifting the state pension makes no sense, 23 June) support the contention that the UK can’t afford a cost of living increase in pensions . A 10% rise in the state pension of £9,500 is £950 – compare that with the likely £1,800 rise in energy costs. How would the extra cash received by poorer pensioners who wholly or mainly depend on the state pension contribute to inflation? Most would go into the pockets of the energy companies. Surely it would be fairer to have a more progressive tax system for richer pensioners or a progressive rise in energy costs, where the unit price could increase with the amount consumed?
Rising fuel costs, higher wages and the surging price of imported goods and raw materials are forcing a ‘change of behaviour’Britain’s army of more than a million small and medium-sized businesses are stockpiling raw materials and ordering components six months ahead to overcome supply shortages that prevent them from meeting customer demands.With construction costs reaching fresh record highs and import prices surging following a fall in the pound, businesses reported that much of their cash was tied up in securing the basic raw materials and components needed to supply customers. Continue reading...
UCL’s research, knowledge and support for business startups provides boost ‘equal to holding Olympics every year’University College London has boasted its financial contribution to the British economy is the equivalent of hosting the Olympics every year – in part because of how it encourages graduates to create jobs and investment around the country.An independent report commissioned by UCL estimates that the university generates close to £10bn a year in economic activity from its spending of £1.67bn. According to the consultancy London Economics, that figure “is comparable to the boost in international trade and inward investment delivered by the 2012 London Olympics”. Continue reading...
Western leaders hope to tighten vice around Vladimir Putin without causing backlash at home or in global southA proposed cap on the price of Russian oil and pipeline gas to slash the Kremlin’s revenues and reduce inflationary pressures in the west gathered support on Sunday as G7 leaders met in Bavaria.The three-day event will be dominated by discussion of how to tighten the economic and military vice around Vladimir Putin without leading to disastrous spillovers, including a backlash among western consumers and starvation in a rain and grain-starved global south. Continue reading...
Global Investment and Infrastructure Partnership, aimed at rivalling China, comes a year after Build Back Better World planThe G7 has been forced to relaunch its vehicle to provide infrastructure funds to poor and developing countries only a year after a largely similar scheme was unveiled at the G7 conference in Cornwall last July under the label Build Back Better World.The fund was relaunched at the start of the G7 in Germany on Sunday as the Global Investment and Infrastructure Partnership and with the same goal of providing an alternative to the Chinese belt and road initiative that Beijing has used for more than a decade to build economic ties with developing countries. Continue reading...
Volume of Russian crude bought and then exported by India suggests some of it may end up in European petrol stationsThe huge blue and red hull of the SCF Primorye came into port at Vadinar, western Gujarat, India, earlier this month. The 84,000-tonne oil tanker, built in 2009 and sailing under the Liberian flag, had arrived from the port at Ust-Luga, a settlement in Russia near the border with Estonia.Until 2017, the Vadinar oil refinery was controlled by Essar – the Indian owner of the Stanlow refinery in Ellesmere Port. Since then a consortium including the sanctioned Russian state-owned oil firm Rosneft and the commodities trader Trafigura, which holds a 24.5% stake, have owned Nayara Energy, which runs the refinery. Continue reading...
The Chips Act would provide an enormous subsidy to chipmakers for making their chips in the US. This is extortionCongress will soon put final touches on the Chips Act, which will provide more than $52bn to companies that design and make semiconductor chips.The subsidy is demanded by the biggest chipmakers as a condition for making more chips in America.Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com Continue reading...
The philosopher Harry G Frankfurt’s book on dishonesty offers a valuable insight into the Johnsonian mindsetI would love to have been a fly on the wall when the subject of the EU came up during the meetings between Boris Johnson and Ukraine’s President Zelenskiy. How could Johnson, master of bullshit, have possibly handled the irony of the situation? He, the principal culprit in what is being increasingly recognised as the self-harm of Brexit; and Zelenskiy, desperate to join the EU that the UK, in its unforgivable folly, has left.Now, I use the word bullshit – not normally one that appears in this column – advisedly. I have read a short book by a renowned American moral philosopher, Harry G Frankfurt, entitled On Bullshit. Frankfurt examines the distinction between humbug – “deceptive misrepresentation, short of lying” – and outright lying; he sees his third category, bullshit, as “a lack of connection to a concern with truth”. It is “this indifference to how things really are” that he regards as “the essence of bullshit”. Continue reading...
Data due this week will be closely scrutinised to discern whether the market’s remarkable resilience is falteringEvery economic indicator in Britain has started flashing red, but the housing market has marched relentlessly on.Nationwide building society will release its latest house price index for June this week, along with regional data for the second quarter, while the Bank of England’s latest mortgage lending figures should also shed more light on the state of the UK property market. Prices are up 5% this year, although uncertainty about the wider economy has meant Nationwide has not issued an annual house price forecast. Continue reading...
Smaller grocery bills amid rising cost of living behind 0.5% drop in retail sales in May, statistics body says• Tough summer ahead for shops as consumer confidence hits rock bottomAlmost half the adults in Great Britain are cutting back on the amount of food they buy as the cost of living crisis forces them to trim their weekly supermarket shop, the latest official figures have shown.In stark evidence on the effect of rising inflation on spending patterns, the Office for National Statistics said 44% of adults surveyed last month said they were buying less food – up from 18% at the start of the year. Continue reading...
Acquisition comes at a time of intense competition in the mortgage marketBarclays is to buy the specialist mortgage lender Kensington Mortgages for £2.3bn, in a dash for mortgage books as interest rates rise.The acquisition comes at a time of intense competition in the mortgage market, and as rising interest rates provide a boost to lenders. Continue reading...
Cancelling poor nations’ historic debts would allow their governments to channel money into climate adaptationIt has proved too easy to stop people uniting around the crucial issues of our time. Those who demand better pay and conditions for workers and justice for poor people have been pitched by demagogues and corporate lobbyists against those who demand a habitable planet.For years, we have struggled with the question of how to overcome this division and create a social and environmental justice platform that could unite vast numbers of the world’s people. Only one thing was clear: any such campaign had to be led by activists from poorer nations. Now, I believe, the breakthrough has arrived.George Monbiot is a Guardian columnist Continue reading...
by Lisa O'Carroll Brexit correspondent on (#60PND)
David Lammy, the shadow foreign secretary, confirms party won’t seek to rejoin single market or EU blocLabour has broken its long silence on Brexit, laying out detailed plans to improve, not scrap, the deal Boris Johnson struck with the EU, in a move it concedes will enrage remain supporters.On the sixth anniversary of the Brexit referendum, the shadow foreign secretary, David Lammy, confirmed the party would seek only limited changes and would not seek to rejoin the single market which would bring the return of free trade and free movement of people. Continue reading...
Sunak’s attempt to make a distinction between increases in pensions and wages fuels a sense of political favouritismThe government has got itself into a fine muddle on the triple lock pension guarantee, David Cameron’s gift-cum-bribe to older voters in 2010 that has ricocheted down the years. On the one hand, Boris Johnson and Rishi Sunak argue that awarding inflation-matching pay rises to public sector workers would risk an “inflationary spiral” and so should be avoided. On the other, the chancellor maintains that lifting the state pension by 10% – the figure likely to be produced by the triple lock formula – wouldn’t create inflationary pressures.The position makes no sense. Income increases, whether delivered via pension payments or pay packets, all contribute to aggregate demand and spending capacity. Sunak’s attempt to make a distinction – “pensions are not an input cost into the cost of producing goods and services we all consume so they don’t add to inflation in the same way,” he said – only fuelled the sense of naked political favouritism. Teachers, to alight on the next bargaining battleground, aren’t manufacturing soap suds either. Continue reading...
Spirit of consensus has gone as ministers seek a scapegoat for the stagflation affecting the economyA little more than two years ago Rishi Sunak stood outside 11 Downing Street flanked by the head of the TUC, Frances O’Grady, and Carolyn Fairbairn, the boss of Britain’s leading employers’ group, the CBI. The photo op was meant to demonstrate a new spirit of tripartite solidarity that would help see Britain through the pandemic.The TUC had played a big part in plans for the furlough wage subsidy scheme and the chancellor was eager to show his gratitude. Announcing the government’s emergency economic package to parliament, Sunak thanked the TUC for its “constructive conversations” with the Treasury. Continue reading...
Business confidence slumps to level that typically signals imminent recession, warns economistBritain’s economy is starting to “run on empty” as post-pandemic order books dry up and the highest inflation in 40 years affects confidence, the latest snapshot of the private sector has shown.Flash estimates of the economy’s performance in June showed business optimism at its lowest since the early months of the Covid pandemic in the spring of 2020 and the sharpest drop in new order volumes for a year. Continue reading...
Interest on debt payment leaps 70% on a year ago to £7.6bn, a monthly recordGovernment borrowing was higher than expected in May at £14bn as soaring inflation sent interest payments on the UK’s debt to a monthly record.The Office for National Statistics (ONS) said debt interest payments leapt 70% on a year ago to £7.6bn, the third highest debt interest payment made by central government in any single month and the highest payment in May on record. Continue reading...
Supplies are running ‘two to three weeks’ behind, a situation the store says has been exacerbated by post-Brexit staff shortagesHarrods has delayed its summer discount sale by two to three weeks because of global supply chain hold-ups, it has announced.“Our supply chain is running two to three weeks behind where it should be,” Michael Ward, the managing director of the upmarket Knightsbridge department store, told Bloomberg TV at the Qatar Economic Forum. “A good example of that is, we’ve just delayed the summer sale for two weeks because I need another 10% of new-season stock to allow me to function into the new year.” Continue reading...
by Rowena Mason and Richard Partington on (#60MKR)
Jim O’Neill scathing about decision to help pensioners while forcing real-terms pay cuts on public sector workersGovernment plans to raise the state pension by 10% while forcing real-terms pay cuts on public sector workers have been attacked as “ludicrous” by a former Conservative Treasury minister.Jim O’Neill, the former Goldman Sachs chief economist who served as a minister under George Osborne, said it was “crazy” to protect pensioner incomes while younger people’s wages were being eroded by the highest inflation rates for 40 years. Continue reading...
Senator Elizabeth Warren criticizes the Fed’s rate moves, expressing fear that rate hikes will ‘drive this economy off a cliff’The Federal Reserve will keep raising rates until it sees “compelling evidence” that inflation is coming down, the Fed chair, Jerome Powell, told Congress on Wednesday.The US is wrestling with rates of inflation unseen in 40 years and Powell warned that “further surprises could be in store”. Continue reading...
Rising prices and recession mean the last thing the government should do is muddle through and leave everything to the marketInflation is back with a vengeance. The cost of living has not been rising this fast since the Falklands war. Prices are climbing faster than wages. In every respect bar one, this is clearly bad news. The best that Britain can hope for in the months ahead is a period of stagflation: weak growth and rapidly rising prices. If things get really bad, we could be on course for an “incession” – high inflation combined with a recession. Either way, the outlook is grim, especially for those on the lowest incomes, who spend most on energy and food, for which price increases are heftiest.The one consolation is that high inflation acts as a national wake-up call. Or at least it should do. For far too long, the UK has drifted along convinced that all is well because cheap imports from China are keeping inflation low and rock-bottom interest rates are fuelling a house-price boom. It would be nice to think we have finally woken up to reality. But that in itself is an illusion. Just as in the 1970s, the economy’s structural weaknesses have been exposed by a period when prices are hurtling upwards. Continue reading...
The pressures faced by one Yorkshire rice importer illustrate how costs feed through to consumersThe 20kg bags of rice stacked on ceiling-high shelving units look like any other but are the first to arrive in the West Yorkshire depot from Vietnam as the food price shocks fuelling inflation force companies to find cheaper ingredients.Jason Bull, one of the directors of Eurostar Commodities, which imports rice and flour destined for restaurant chains, supermarket suppliers and caterers, says the Brighouse-based company is facing its biggest challenge in nearly 30 years. Continue reading...
Stuart Rose flags ‘massive change’ in consumer behaviour and says No 10’s priority is to get inflation downShoppers at Asda are setting themselves £30 limits at checkouts and petrol pumps, the supermarket’s boss says, as consumers tighten their belts because of the cost of living crisis.Customers are employing several tactics to not overspend, said Stuart Rose, including putting fewer items in their baskets and opting for budget ranges. Continue reading...
Analysis: PPI, the indicator of rises before they reach the consumer, shows higher price rises to come• UK inflation rises to 9.1%, its highest rate in 40 yearsAre we there yet? Each month the same question is asked about the UK’s inflation rate. Is there any sign of the cost of living crisis abating? And each month the answer is in the negative. The current upward trend has further to go.May’s increase in the consumer prices index – the government’s preferred measure of inflation – was modest by recent standards but even so the rise from 9% to 9.1% was a new 40-year-high. Continue reading...
by Richard Partington and Rowena Mason on (#60MCT)
Headline CPI rate will add to cost of living crisis, fuelled by rises in food and transport costs• If UK inflation feels bad now, the grim news is worse is on the wayUK inflation has increased to 9.1%, its highest rate in 40 years amid record prices for petrol and the soaring cost of food.The figures from the Office for National Statistics showed an increase in May from 9% in April, as measured by the consumer price index, in a reading that matched the forecasts of City economists. In a fresh high, the headline inflation rate has hit a level not seen since February 1982, piling pressure on households in the cost of living crisis. Continue reading...
by Richard Partington Economics correspondent on (#60M50)
EU withdrawal fuelling higher import costs and costing British workers nearly £500 a year, says Resolution FoundationBritain’s cost of living crisis is being made worse by Brexit dragging down the country’s growth potential and costing workers hundreds of pounds a year in lost pay, new research claims.The Resolution Foundation thinktank and academics from the London School of Economics said the average worker in Britain was now on course to suffer more than £470 in lost pay each year by 2030 after rising living costs are taken into account, compared with a remain vote in 2016. Continue reading...
But sales have fallen to slowest pace since June 2020, near start of pandemic, and demand for homes still outstrip supplyThe average US house price hit an all-time high of over $400,000 in May even as interest rate rises and high prices led to a fourth consecutive month of declining sales.Existing home sales fell 3.4% last month from April to a seasonally adjusted annual rate of 5.41m, the National Association of Realtors said on Tuesday. Sales fell 8.6% from May last year, hitting a two-year low. Continue reading...
Musk’s comments, echoing other CEOs, are accompanied by plan to lay off 10% of Tesla’s salaried staffElon Musk has warned that a US recession is “more likely than not” to come soon as the Tesla chief executive confirmed plans to cut 10% of salaried staff at the electric carmaker over the next three months.The world’s richest man said a recession in the US was inevitable but would most probably come in the short term. Continue reading...
Living costs face squeeze even though pay deals in three months to May are highest since 1992Annual pay growth stalled at 4% in May, leaving most workers with a rise in earnings worth less than half the 9% increase in prices.Figures from XpertHR, a pay and personnel data publisher, said employer pay deals for the three months to May failed to increase on April’s median 4%, undermining concerns that workers would push for inflation-busting rises in earnings that could start a wage-price spiral. Continue reading...
by Niels de Hoog, Ashley Kirk and Hilary Osborne on (#60KA3)
Highest inflation rates since the 1980s and wage stagnation have squeezed household budgetsBritain is facing the highest rates of inflation since the early 1980s, with households suffering the biggest hit to their incomes since modern records began. Energy bills are soaring, as is the cost of petrol. Food inflation is at a 13-year high, running at 8.3%, the market research firm Kantar said on Tuesday. The government has announced billions of pounds in emergency financial support, but has faced heavy criticism over its handling of the cost of living crisis as millions struggle to afford the basics.
Engineering firm says it is the first time it has made payment linked to economic climate not performanceRolls-Royce is to give more than 14,000 staff a £2,000 payment to help them cope with the soaring cost of living, the first time the engineering firm has made such a move.The one-off payment will go to shopfloor staff and junior management, who are mainly based at the company’s two biggest sites in Derby and Bristol. They represent 70% of Rolls-Royce’s UK workforce of about 20,000. Continue reading...
Without decent pay offers Britain risks remaining trapped in a low-wage, low-growth spiralBritain faces a rolling wave of strikes over pay and conditions in the coming months. The country’s railways will be effectively shut down for a week. Barristers will walk out from next Monday, stopping criminal trials in courts. Wage disputes have led to rubbish piling up in some parts of the country, while other regions have suffered late postal deliveries. Teachers and doctors are the latest professions threatening to strike if the government doesn’t meet their pay demands. But the country is not heading back to the 1970s. Trade unions in Britain have lost much of their clout in the workplace.Despite the headlines, the number of days lost to strikes has collapsed. At their peak, about half of employees were union members. Now the figure is 24% and these are disproportionately found in the public sector – which is why the government is facing off against so many groups. With pay deals yet to be signed, ministers find themselves facing calls for inflation-linked wage increases for 5 million workers, including those in the NHS, the armed forces, the civil service and local government. Continue reading...
Catherine Mann says Bank of England’s MPC is in danger of falling behind rival central banksThe Bank of England should raise interest rates more aggressively to shore up the weak pound, according to one of the central bank’s policymakers, who warned that sterling’s depreciation was fuelling inflation from higher import costs.In a hard-hitting speech, Catherine Mann said the nine-strong monetary policy committee (MPC), which she joined last year, was in danger of falling behind rival central banks that were taking a more energetic approach to tackling inflationary pressures. Continue reading...
Treasury officials’ fear that rising pay in pursuit of rising prices will create a vicious circle may be unjustifiedUnion leaders have derided calls by government ministers for wage restraint, believing their members must close the gap with rising inflation or risk a severe cut in living standards.One of the main reasons cited by officials in the Bank of England and the Treasury for wage restraint is the threat of a wage/price spiral and the fear that this ratcheting effect will make double-digit inflation a longstanding feature of life in the UK. Continue reading...
Unsparing inflation across basics from food and energy to housing is pushing millions into poverty, as our correspondents reportAustraliaA photo of iceberg lettuce heads with $11.99 (£6.80) price tags went viral in recent weeks – leading to a wave of a tongue-in-cheek lettuce memes nodding to rising food, fuel and energy prices. Continue reading...
Government urged to act as firms hit by rising costs of energy, raw materials and transportBritish manufacturers have called on the Treasury to urgently provide more support amid a poor economic outlook to help “weather the immediate storm”.Make UK, the trade body for manufacturers, and the consultancy BDO found that costs were continuing to rise and output opportunities had been stifled. Continue reading...
While Boris Johnson plays politics, Britain’s public sector is fraying at the seamsEverywhere we look, the fabric of Britain is fraying at the seams. Strikes on the railways, airports in chaos, severe staff shortages, soaring prices for petrol and food, the biggest fall in living standards since the 1950s.With the biggest industrial dispute on the rail network in three decades due to begin this week, battle lines are drawn. Alongside the succession of shocks caused by the Covid pandemic and Russia’s war in Ukraine, Boris Johnson’s government will add another culprit for our palpable sense of national decline: workers. Continue reading...