‘Rocket’ was once good enough as a metaphor, but now the ante has been firmly upped skywardsWhen exactly did we become a nation of hyperbolic pyrotechnicians? I only ask because I can’t help noticing the glut of headlines featuring the word “skyrocket”.“Taste of things to come as food prices skyrocket” was just one example last weekend. Then there was, “Referral bonuses skyrocket as staff shortages rise”, “Used Tesla Prices Skyrocket, Selling For Huge Premium Over New Models”, “Burton jewellery firm started in leaky garden shed sees sales skyrocket”, “Energy bills set to skyrocket to £2,800 in the autumn for millions, MPs told”. Continue reading...

Hard-pressed Britons will need this money, even though the cost-of-living crisis is seen as ‘coming to the PM’s rescue’Things have reached a pretty pass when, in order to divert attention from their own decadence, Boris Johnson and his lickspittle party have decided to make a big thing of the cost-of-living crisis – a crisis, mark you, aggravated by the cumulative impact on food and other prices that is the direct consequence of Brexit.The worst cost-of-living crisis in most people’s memory seen as coming to Johnson’s rescue? The chance to claim you are mitigating it with measures extracted reluctantly from a chancellor who has previously made a point of cutting the real value of social benefits? “Moving on”? Yes, that is the nadir of the British polity to which we have been brought by the charlatan who “got Brexit done”. Continue reading...

The Guardian Australia’s political editor, Katharine Murphy, discusses the election result and the country’s economic situation with economics columnist Greg Jericho and the senior economics correspondent for the Age and the Sydney Morning Herald, Shane Wright. Continue reading...

There is no such thing as a free market – they are always set up to serve particular interest groups, writes Dr Tony BrauerIn your editorial on inflation (18 May), you call for “a reckoning for a free market ideology that has come to dominate our political life”. I agree, except that there is no such thing as a free market. All markets are structured to serve the interests of particular interest groups, and rarely for the common wealth.Nor should ideologues such as Boris Johnson be allowed to blame these crises on global systems. The systems didn’t just pop into existence; they have been constructed from a particular vision of global capitalism. Johnson and his ilk created the conditions from which low productivity, increasing inequality, and inflation have emerged. Further, there are plausible arguments that the global capitalist system is a good breeding ground for international pandemics, xenophobic nationalism and economic and military imperialism. Continue reading...

PM warns that UK faces difficult period, but can avoid recession, as Resolution says wealthy pensioners are biggest winners from £15bn cost of living package

As the Conservatives introduce an ‘energy profits levy’, we look at their history of copying opposition ideas

PM sounds upbeat note on economy amid some disquiet among Tory MPs over £15bn cost of living package

Soaring prices are familiar to older Britons. But their return could lead a fragile, divided country into uncharted territoryWhen a government pinches a key opposition policy it has spent months deriding, and which goes directly against its ideology, you know something pretty big is going on. The Tories’ screeching U-turn over a windfall tax on energy companies in order to fund payments to “ease” the cost of living crisis is in part a typically crude attempt to change the subject from Partygate. But it is also a more revealing signal: that the government has, belatedly, become very worried about the politics of inflation.It is right to be. For a lot of voters, many of them Tories, high inflation is very frightening. Savings shrivel. Pay rises are rarely enough. Investing safely seems impossible. State benefits are even less sufficient than usual. Luxuries, small treats and even essentials become unaffordable. The whole process of personal enrichment promised by capitalism goes into reverse. The solidity of money – the basis for so much of our lives – is revealed as an illusion. It becomes clear that money can decay, like everything else.Andy Beckett is a Guardian columnist Continue reading...

Analysis: Many Tory MPs say they don’t get what the chancellor stands for and this policy reversal won’t enlighten them

Analysis: permanent increase in benefits needed to deal with rising prices and inflation, thinktanks sayRishi Sunak’s response to the cost of living crisis has received a mixed reception, with charities and anti-poverty groups saying it provides temporary relief for millions of households but leaves those on the lowest incomes facing an uncertain future.The package of measures will boost the incomes of 8 million low-income households with one-off increases to welfare payments in this financial year The chancellor rebuffed calls for permanent increases in benefits to cope with rising prices. Continue reading...

Rolling coverage of the final day of the World Economic Forum in Davos

Rishi Sunak has succumbed to pressure to do more to tackle the cost of living crisis and announced a £5bn windfall tax on energy companies, calling it a 'temporary, targeted energy levy'. His statement was met with uproar from Labour MPs, who have repeatedly called for a windfall tax on energy firms. The chancellor said the oil and gas sector was making 'extraordinary profits' due to surging global commodity prices driven in part by Russia’s war. As a result, he said he was 'sympathetic' to the idea of taxing these profits fairly, but had found a sensible middle ground: a 'temporary, targeted energy profits levy' of 25%, but with 90% tax relief for firms that invest

Chancellor announces new policies to tackle energy costs and inflation – here are the main points, with political analysis

From a warning of third world war to global stagflation or depression, gathering is unsurprisingly sombreThe impact of Russia’s invasion of Ukraine dominated a delayed and slimmed-down World Economic Forum this year but it took George Soros to articulate what many of those making the trip to the Swiss Alps had been thinking.Davos would not be Davos without a broadside from the 91-year-old philanthropist and former speculator, but the conflict in eastern Europe prompted his most apocalyptic warning yet. Continue reading...

IFS and Resolution Foundation warn of disproportionate impact of energy prices on low-income householdsBritain’s poorest households are expected to see their living costs increase by almost twice the rate as the richest in society do when energy bills rise this autumn, leading economists have warned.The Institute for Fiscal Studies (IFS) said the fresh surge in gas and electricity bills expected in October could lead to average annual inflation rates of as high as 14% for the poorest tenth of households. Continue reading...

Reserve Bank ‘resolute in its commitment’ to keep inflation in the 1-3% target range, signalling further rate rises may still be neededNew Zealanders could feel rising living costs bite down harder in the next few months, as the central bank lifts interest rates by half a percentage point to 2% – its highest level since 2016.The increase matches expectations and is the second rate hike in two months as the Reserve Bank (RBNZ) attempts to rein in inflation, now at a 30-year high. Continue reading...

TUC says suggestion that higher pay for workers this year will push up inflation is ‘nonsense’Unions have warned of a “hammer blow to morale” across the public sector after Downing Street said ministers would have to take into account the risk of stoking inflation when deciding this year’s pay awards.A readout of Tuesday morning’s cabinet meeting revealed that ministers “held a discussion on public sector pay”, which would affect government officials, nurses, police, teachers and NHS workers struggling during the cost of living crisis. Continue reading...

Veteran philanthropist tells World Economic Forum civilisation ‘may not survive’ what is coming

Rolling coverage of the second day of the World Economic Forum in Davos

Some doubt the OECD-brokered agreement, which would levy more tax on the world’s largest firms, will ever be implementedAn international deal that would force the world’s biggest multinational companies to pay a fair share of tax has been delayed until 2024 amid fresh wrangling over the painstakingly negotiated agreement.Mathias Cormann, the secretary-general of the Organisation for Economic Co-operation and Development (OECD), told the World Economic Forum in Davos, Switzerland, that there were “difficult discussions” taking place that meant the deal could not come into force in 2023, as previously hoped. Continue reading...

The Restaurant Group says it still expects to meet full-year profit forecasts despite surge in costsThe owner of Wagamama, Frankie & Benny’s and Chiquito expects food and drink inflation to reach as much as 10% this year, double the rate predicted just two months ago, as the war in Ukraine disrupts supply chains.The Restaurant Group, which operates about 400 outlets, said it was working with its supply chain to offset the cost rises but warned “this remains a volatile inflationary market”. Continue reading...

Jens Stoltenberg tells business leaders in Davos that values should matter more than profits

Tax receipts are weaker than expected, revealing impact of UK’s slowing economyThe chancellor is expected to come under renewed pressure to offer a larger financial package of support to low-income families suffering from the cost of living crisis after the public spending deficit in April came in lower than expected.With the cabinet understood to be concerned about the government’s falling poll ratings as the cost of living crisis escalates, the government borrowed £18.6bn last month – lower than forecast and down by £5.6bn from a year ago, according to Office for National Statistics figures. Continue reading...

Speaking at Davos, Kristalina Georgieva said anxiety about food prices was ‘hitting the roof’ globallyThe head of the International Monetary Fund (IMF) has said the war in Ukraine has darkened the outlook for the global economy and could result in recession for more vulnerable countries.Kristalina Georgieva predicted that 2022 would be a tough year and declined to rule out a global recession if conditions worsened markedly. Continue reading...

Andrew Bailey defends response to Covid pandemic and indicates Bank will not take aggressive approach to raising interest ratesThe governor of the Bank of England has hit back at critics who accused him of being asleep at the wheel while inflation soared and a cost of living crisis hit UK living standards.Andrew Bailey said the nature of the shock meant higher interest rates could damage the economy, which recovered slowly from the pandemic during 2021. Continue reading...

Rolling coverage of the first day of the World Economic Forum in Davos

We answer readers’ questions about how the rise in cost of living will affect themThere is no escaping inflation: whether it’s energy, food, transport or entertainment you are paying for, prices are going up – and at pace.Once again this week’s headlines have been dominated by the latest figures – on Wednesday we learned that inflation had reached a 40-year high of 9%. Plus, there have been warnings of worse to come. But what does it all mean? We asked readers what questions they had about inflation and its impact, and have tackled them below. Continue reading...

If economy goes into tailspin, gap between areas with weak and strong labour markets would be exposedThe message from the government is clear. A booming labour market represents the silver lining to the dark cloud hanging over the economy. There are more job vacancies than there are people officially classified as out of work and firms are paying signing-on bonuses to attract staff. What’s more, as Boris Johnson said repeatedly at prime minister’s questions last week, an unemployment rate of 3.7% is the lowest since 1974.No question, the labour market is in better shape now than ministers expected even six months ago. Back then there was concern that the end of the Treasury’s furlough scheme would lead to large numbers of firms going bust and a significant increase in unemployment. Continue reading...

This year’s meeting may just manage some climate progress, but many say the forum is irrelevant in a changed worldThe highlight of the last gathering of the global elite in Davos was a spat between Greta Thunberg and Donald Trump. It was January 2020 and scant attention was being paid to reports of a new virus recently detected in China. Most of those who made the trek to the Swiss alpine resort were too busy virtue-signalling their deep concern about inequality and the climate emergency.A lot has happened in the intervening 28 months. What was assumed to be a little local difficulty in Wuhan turned out to be the start of a global crisis. The January 2021 Davos was a virtual affair, and the annual meeting of the World Economic Forum (WEF) pencilled in for January 2022 was postponed because of the spread of the Omicron variant of Covid-19. Continue reading...

Conditions have improved for a select few but on wages and flexible hours, the trend for employees is generally backwards. Can the rate-setters grasp that?Goldman Sachs has bowed to demands for a less stressful workplace by offering a “flexible vacation” scheme that allows senior bankers to take a holiday whenever they feel like a break.Generosity further down the investment bank’s global chain of command is more limited: it has told traders and admin staff – who are notorious for taking breaks lasting just a day – that they should disappear for at least one solid week out of the minimum of 15 days. Continue reading...

The banker and former regulator has seen many crises in his career, but war and political division have him worriedSir Howard Davies is a worried man. He is worried about political polarisation. He is worried about the long-term impact of Brexit on the City of London. And he is worried by the pushback against globalisation.One thing he is not especially worried about is the health of the bank he chairs, NatWest, which in its former guise as Royal Bank of Scotland was on the edge of collapse during the global financial crisis of 2008. Continue reading...

The Bank of England governor warned last week of ‘apocalyptic’ food price rises. Yet war in Ukraine, climate change and inflation are already taking their toll all over the worldApocalypse is an alarming idea, commonly taken to denote catastrophic destruction foreshadowing the end of the world. But in the original Greek, apokálypsis means a revelation or an uncovering. One vernacular definition is “to take the lid off something”.That latter feat is exactly what Andrew Bailey, governor of the Bank of England, achieved last week, possibly inadvertently, when he suggested Britain was facing “apocalyptic” levels of food price inflation. Tory ministers fumed over what they saw as implied criticism of the government’s masterly economic management. Continue reading...

Which? analysis finds cereal, mushrooms and cheese among the items to have risen the mostAt Sainsbury’s in Whitechapel, east London, the rising cost of food has forced Petra Emmanuel to change her shopping habits.“Coupled with my utilities bill, it’s ridiculous,” the 51-year-old teacher said. “Even though I don’t buy branded foods, it’s the simplest items that have seemed to have gone up. Continue reading...

We would like to hear your experiences of companies skimping on the quality of their productsWe would like to hear your experiences of “skimpflation” – a term used to describe when companies skimp on the quality of their products and services to save money instead of putting up prices. This can result in a worse experience, such as a long delay, a bad journey, or a poorer quality product.For example, does something you buy regularly still cost the same but now seems to be made out of cheaper materials or ingredients? Have you noticed changes in local cafes or restaurants? What was your experience when you went on holiday? Did you get the service you expected? Were you charged for things that used to be free? Continue reading...

Some Tory stalwarts may be angry but state of the economy could be what brings the prime minister down

BoE’s Huw Pill says MPC faces its biggest challenge in 25 years, and indicates further monetary tightening needed to avoid wage-price spiral

Tansy Hoskins, author of a book on the impact of fast fashion, says the true cost of knock-off clothes is being paid by garment workersBrowse the makeup sections of Aldi, Lidl, Primark and many more, and it won’t be long before you come across “dupes”. Immensely popular with generation Z, these are near “duplicates” of luxury items created by budget brands. Copyright issues aside, how ethical are they? I spoke to Tansy Hoskins, whose books dissect the impact of fast fashion.I’ll never forget being a teenager and discovering my Reeboks were actually knock-off “Reeborks”. The shame! Aren’t dupes fakes by another name?

Bank of England’s Huw Pill warns ‘further work needs to be done’ after recent base rate risesThe Bank of England will intensify its squeeze on the economy over the coming months as it seeks to bring down the highest inflation rate in 40 years, its chief economist has warned.Noting that Threadneedle Street was facing its toughest challenge since being granted independence in 1997, Huw Pill said “further work needs to be done” to bring the annual inflation rate back to the government’s 2% target. Continue reading...

Attempts to boost flagging GDP growth hindered by Covid lockdowns, Ukraine war and Sino-US tensionsAt a recent online gathering of top Chinese economists, a palpable sense of urgency filled the virtual meeting room. In recent weeks, a slew of reports by Chinese and foreign economists pointed to a deteriorating economy. Outside the country, talk of China being the engine of global economic growth no longer convinces.During the meeting Huang Yiping, a Peking University professor and a former central bank adviser, urged Beijing to “do whatever it takes to save the economy”. Huang was paraphrasing a line from the height of the European debt crises more than a decade ago, when the European Central Bank’s then president, Mario Draghi, said it was ready to “do whatever it takes to preserve the euro”. Continue reading...

Part of April increase may be down to people staying in to save money, says ONSConsumers in Great Britain carried on spending last month despite the highest inflation rate in 40 years, providing high street and online retailers with a surprise boost.The Office for National Statistics (ONS) said there was a 1.4% monthly jump in retail sales in April but said the trend was still weak and that part of the increase might be down to people staying in to save money. Continue reading...

Consumers increasingly pessimistic about economy and personal finances amid deepening cost of living crisisConsumer confidence in the UK has fallen to the lowest level since records began in 1974 amid growing concern over the cost of living crisis.Stoking fears that Britain is heading for a recession caused by the squeeze on family budgets, the latest monthly snapshot showed consumers are now gloomier about their prospects than they were during the 2008 financial crisis. Continue reading...

Kristalina Georgieva cites Russia’s war in Ukraine and cost pressures caused by China’s zero-Covid policiesGlobal finance leaders should prepare for multiple inflationary shocks, the head of the International Monetary Fund has warned, as fears of a global economic downturn continue to hit markets around the world.The IMF’s managing director, Kristalina Georgieva, said it is becoming harder for central banks to bring down inflation without causing recessions. Continue reading...

Analysis: the chancellor has a set of options for making the tax system fairer at the same time as bringing in revenueSuppose the chancellor wanted to follow Scottish Power’s advice, and give Britain’s most hard-up households £1,000 towards their energy bills this winter? Would it be possible to raise the £10bn needed in a way that didn’t just tax the same people he would be trying to help? I can think of at least three options, any of which would do the job, and all of which would make the tax system better as well. Continue reading...

Postal service says potential rise would help offset higher staff and energy costs and fall in parcel deliveriesRoyal Mail has warned that it is likely to raise prices again for stamps and letters, as part of efforts to combat rising costs and offset a post-pandemic slowdown in parcel deliveries.The delivery company said on Thursday it would try to make up for falling revenues and higher staff and energy costs through “price increases and growth initiatives” over the next year, having already raised the price of sending letters and parcels by 7% and 4% respectively. Royal Mail said it had also introduced a fuel surcharge in some of its contracts, in a move that finance chief Mick Jeavons said was “fairly measured”. Continue reading...

Chief of business association calls for stimulus that aids ‘hardest hit’ with rising food and fuel billsTackling rising food and fuel bills will not add to inflation and people who are “the hardest hit” need help now, the head of the UK’s biggest business association has warned.Official figures published on Wednesday revealed UK inflation soared to 9% in April – its highest level for more than 40 years – as the rising cost of gas and electricity pushed household energy bills to record levels. Continue reading...

As inflation hits 9%, four English businesses explain how they are negotiating soaring pricesNotifications arrive every day at Loveone, an Ipswich gift shop, heralding price increases of 5% to 10% on products it sells, usually adding a couple of pounds to the sticker price.“If I don’t get my orders in by a certain date then I will have to pay more,” says Cathy Frost, who has run the shop for 15 years. “I can kind of hold my prices for the moment as I ordered stock six months ago, but if the things I’m ordering now are going to be more expensive, I’m asking: ‘Will people pay more?’” Continue reading...

In today’s newsletter: As inflation hits a 40-year high of 9%, Archie Bland explores the causes of the crisis, and the potential solutions left out of the debate

Shortages of grain and fertiliser could cause ‘mass hunger and famine, says chief, as World Bank pledges $12bn to ease shortfall

Tories say taxes must fall to curb inflation, even at the cost of a higher deficit. Labour should argue that public spending could be increased for the same reasonThe Bank of England this week joined the ranks of the “enemies of the people”. Damned for the governor’s gloomy but accurate assessment that UK consumers face an “apocalyptic” spike in food prices, the Bank found itself on the front pages of the populist press. The Old Lady of Threadneedle Street stood accused of being “asleep at the wheel” as prices soared.But hiking interest rates would not have stopped escalating costs. The Bank’s governor, Andrew Bailey, was right when he said that inflation – which reached a 40-year high of 9% – had been driven by international events. Covid supply chain disruptions, the Russian invasion of Ukraine and Brexit are all beyond his control. Higher interest rates are not going to produce more oil or more wheat and bring down the prices of key commodities.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 300 words to be considered for publication, email it to us at guardian.letters@theguardian.com Continue reading...

Low wages growth, inflation, price rises and jobseeker are combining to put talk of a strong recovery from the pandemic into contextThe latest wage price index figures confirm that when Australians go to the polls this Saturday, their real wages will be lower than at the last federal election. Not only that, but so bad has been the fall that real wages are now essentially no different from what they were when Tony Abbott took office in 2013.In the latest minutes of the Reserve Bank board, the bank noted it decided not to wait for this latest wage data because while the board “agreed that this information would be helpful … the recent evidence on wages growth from the Bank’s liaison and business surveys was clear”. Continue reading...