Soaring inflation puts heavy pressure on global policymakers

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Today’s data showing Britain’s CPI at a 30-year high and US producer prices rising to record highs are the latest reminder that inflationary pressures around the world are showing little sign of abating. appeasement.

The higher-than-expected jump in UK inflation to 7% in March, from 6.2% the previous month, was driven by soaring fuel prices which jumped 9.9%, leading to a annual rate of increase of 30.7%. The pain felt by consumers was highlighted by an academic study yesterday which showed Britons were now more concerned about the cost of living than Covid-19.

UK businesses are also feeling the pressure. Tesco, the country’s biggest supermarket group, said this morning that its profits would suffer as it tried to stay competitive in the face of soaring costs and squeezed household budgets.

U.S. producer prices rose more than expected by 11.2% in March – the fastest pace since the year-on-year rate was first calculated in 2010 – as as the war in Ukraine begins to affect the world’s largest economy, putting pressure on American businesses.

The US PPI reading follows yesterday’s announcement that the CPI had reached 8.5%, the fastest rate of increase since 1981, and – like in the UK – adds more pressure on the country’s central bank to take action against rising prices. Although the 1.2% monthly rise was the fastest since September 2005, there was better news as the “core” CPI (excluding volatile items such as food energy) did not rose just 0.3%, the smallest increase since September.

US Federal Reserve official James Bullard told the Financial Times it was a “fantasy” to think the bank could bring inflation down without raising interest rates to the point where they could constrain the economy. economy, as he called for an increase to curb growth. .

US President Joe Biden’s latest ploy to ease the pressure on consumers is to temporarily ease restrictions on the amount of ethanol in gasoline, which could save motorists 10 cents a gallon, but at the risk of causing smog.

Concerns are mounting elsewhere as well. New Zealand today hiked interest rates the biggest in 22 years. In continental Europe, Otmar Issing, one of the founding fathers of the euro, criticized the “misguided” response of the European Central Bank, which he said had “lived in a fantasy” and suffered from a “diagnosis wrong” about the reasons for rising inflation and now risked the prospect of stagflation.

The ECB announces its latest policy measures tomorrow.

Browse our inflation tracker to compare the latest figures around the world.

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Need to know: the economy

the Shanghai Lockdown hit production in Kunshan, one of the world’s largest electronics manufacturing hubs, heightening strains on global supply chains. Asia editor Robin Harding said the economic consequences for the rest of the world of the lockdown of China’s biggest onshore financial center and biggest city are huge. The United States has ordered non-essential consulate staff to leave.

An EU ban Russian energy would trigger a “sharp recession” in Germany and cause output to fall by 2.2% next year with the loss of 400,000 jobs, according to the country’s top economists. kyiv, however, urges Brussels to apply an embargo. German investors also become more pessimistic about the future of their country.

Russia said it would sue if punishments forced him to default on his bonds, but academics and lawyers called the threat a “payment theatre”. Robert Armstrong in his (award winning) Unhedged newsletter says punishments hurt the country. Moscow expects economic output to fall 10% this year, according to a former finance minister.

Latest for UK and Europe

UK unemployment fell back to its pre-pandemic level of 3.8% earlier this year, according to official data, but the employment rate remained stable at 75.5%. Vacancies remain high and the inactivity rate has increased as people have left the labor market for family reasons, retirement or illness.

The UK will become the first country in the world to pay pharmaceutical companies a flat fee for antibiotics to tackle the growing problem of antimicrobial resistance, which kills more than a million people a year. The “subscription” model aims to incentivize companies to develop new drugs and stop over-prescribing.

Ukraine Finance Minister Sergii Marchenko called in an interview with the FT for immediate financial support for his country, with the gap between spending and income expected to reach $7 billion a month in April and May.

Latest World

The International Energy Agency has reduced its world oil demand projected 99.7 million barrels per day this year to 99.4 million, but he said the market would avoid a “steep” shortfall as emergency reserves and slowing demand from China offset lower Russian production.

The war will reduce the growth of trade in goods this year by a third, from 4.7% to 3%, according to new forecasts from the World Trade Organization. He also cut economic growth forecasts from 4.1% to 2.8%, with 3.2% estimated for 2023. The WTO chief Ngozi Okonjo-Iweala wrote in the FT that policymakers should address structural weaknesses in a coordinated response to global supply chain issues.

Sri LankaThe country’s economic and currency crisis intensified when the country’s finance ministry suspended payments on its government bonds. It turned to the IMF to formulate a recovery plan and receive financial assistance. The Lex column warned that a bailout could create a blueprint for similar situations elsewhere. The turmoil is a blow to the Rajapaksa family, which has dominated the country’s politics for years.

Need to know: company

Stocks of some of the largest in the world industrial metals fell to extremely low levels due to soaring electricity prices and the war in Ukraine. Aluminum, copper, nickel and zinc inventories have fallen 70% over the past year.

black rock, the world’s largest fund manager, reported better-than-expected first-quarter profits of $1.46 billion as investor inflows held up despite financial market turmoil. However, JPMorgan’s profits fell 42% to $8.28 billion as trading slowed and the bank set aside $1 billion in loan loss reserves. Here’s what to watch for as US earnings season kicks off.

Fund managers were caught up in the rare case of global stocks and bonds falling at the same time in the first quarter. The two key markets underpin global finance and the synchronized decline makes investors’ attempts to balance risk all the more difficult. According to a Bank of America survey, nearly three-quarters of large institutional investors were pessimistic about global economic growth, the highest proportion since 1995.

Finnish telecom giant nokia followed his rival Ericsson and left Russia. The two companies, together with the Chinese groups Huawei and ZTE, are the dominant players in the Russian market for radio network equipment. The former deputy head of Aeroflot wrote in the FT that the Russian business community should rise up against President Vladimir Putin.

As we highlighted in Monday’s Disrupted Times, airlines are struggling to meet growing customer demand while losing waves of staff to Covid-19. British Airways is reeling from the impact of the virus on top of IT issues and the cancellation of 1,200 flights so far this year. EasyJet was one of the hardest hit, but still hopes to report reduced losses for the six months to the end of March.

Column chart of canceled flights from UK airports, January to April 2022, showing BA has canceled over 1,200 flights so far this year

The outlook is rosier for american carriers. American Airlines, the largest in the United States, revised its revenue outlook for the first quarter upwards, while Delta told the FT that it had “never sold more tickets” than in the past few years. last five weeks. US airlines are pushing for the end of mandatory mask-wearing on board to go ahead as planned next Monday.

The coronavirus crisis has shown how much the global pharmaceutical supply depends on Asia, even for the most basic ingredients. Our colleagues from Nikkei Asia conclude their series on the role of China in the global health supply chain and how it might affect the next pandemic.

The world of work

Flexible working has helped many workers to disabled thrive during the pandemic, but how do you make those improvements permanent? Isabel Berwick speaks to an FT activist and staff member about disability inclusion in the latest Working It podcast.

Covid cases and vaccinations

Total number of global cases: 490.8mn

Total doses administered: 11.4 billion

Get the latest global picture with our vaccine tracker

And finally . . .

Air quality is becoming an increasingly important factor for homebuyers looking for a new property, writes health and science journalist Oliver Barnes. Clean air now rhymes with proximity to family and friends and access to public transport as motivation for moving.

Illustration of an astronaut family on a residential street

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