Inflationary pressures ripple through US, China and Europe – Community News
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Inflationary pressures ripple through US, China and Europe

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Today’s news that US consumer prices rose in October at the fastest pace since 1990 is the latest sign of the inflationary pressures facing the world’s major economies as they attempt to recover from the pandemic.

The consumer price index rose 6.2 percent from a year ago, a sharp increase from 5.4 percent in September, reinforcing the impression that inflation is proving to be more persistent than originally expected.

Line chart of annual percentage change in CPI showing US inflation at its 31-year high

Short-dated US Treasuries sold off in the news on expectations that the US Federal Reserve may need to act faster to contain the threat. The Fed has already announced that it will wind down its pandemic emergency measures this month, although Chairman Jay Powell said last week it was too early to raise interest rates.

US President Joe Biden called rising energy costs one of the main drivers of inflation and said it was a “top priority” to reverse the trend. He urged Congress to pass his spending bill, which he said would ease the pressure.

Inflation is also a serious problem for global business. New data released today showed that prices of Chinese factory gates — the cost at which wholesalers buy materials from manufacturers — rose the fastest in 26 years in October, up 13.5 percent from last year.

Chinese consumer prices are also rising faster: the CPI was 1.5 percent higher than in the same period last year and 0.7 percent higher than in September. The cost of fresh vegetables rose 16.6 percent, raising concerns that rising production costs were trickling down to essential goods.

The potential of rising inflation — which hit a 28-year high of 4.6 percent in October — to hamper Germany’s economic recovery was highlighted today by the country’s Council of Economic Experts, which has revised its inflation forecasts for this year. and increased the following year.

Katharina Utermöhl, economist at Allianz, said increasing inflation would also reduce disposable income for households. “Consumption remains our last hope for growth in the winter months, but downside risks to that are mounting,” she said.

Latest news

  • The World Health Organization said the number of coronavirus deaths in Europe rose 10 percent in the past week, making it the only world region where both Covid-19 cases and deaths are steadily increasing (AP)

  • US consumers faced the biggest jump in their energy bills in more than a decade last month, with skyrocketing costs for electricity, natural gas and heating oil (Bloomberg)

  • U.S. unemployment claims drop to new pandemic-era low for fifth straight week

For current news updates, visit our live blog

Need to know: the economy

Russia Gazprom opened the taps to start topping up Europe’s gas storage facilities, but not enough to allay fears of supply. Moscow rejected claims that Gazprom was exacerbating the gas crisis by restricting export volumes to accelerate regulatory approval of the controversial Nord Stream 2 pipeline.

The FT editors appoint Fed chairman Jay Powell should be given a second term to give businesses and investors at least one source of stability at a time of great economic uncertainty.

Latest for UK and Europe

Early Christmas shopping, more cinema trips and more trips abroad stimulated UK retail sales and consumer spending in October, according to the British Retail Consortium. Sales rose 1.3 percent compared to the same month last year — and 6.3 percent above retail spending in October 2019, before the pandemic hit.

Line chart of percentage change compared to the same month two years earlier, showing cinema and travel helped the UK consumer spending recovery

New research data offers mixed signals on the extent of recovery in Germany, the largest economy in the eurozone. Ifo said the country’s retailers will continue to face supply chain issues well into the summer, but Zew’s monthly survey found that investors were more confident.

Worldwide last

the global squeeze supply chain is brought to shoppers in the form of record numbers of “out of stock” messages, according to data from Adobe Analytics. But while delivery times for the world’s manufacturers have fallen to new lows, this usually obscures the fact that there has also been a dramatic rise in demand for consumer durables, according to our Trade Secrets newsletter.

Line chart of 12-month moving average, million TEUs shipped per month showing global container volumes increasing

The impact of last week’s surprise decision by the Bank of England to leave interest rates unchanged has reverberated far beyond the UK, highlighting how a group of smaller central banks found themselves dictating movements in the world’s bond markets

Argentina’s clash with the IMF over a $57 billion bailout is a test of the fund’s ability to help major emerging market economies out of the pandemic crisis, as today’s Big Read explains. The country’s left-wing government desperately needs the money but is pushing for major concessions ahead of Sunday’s midterm elections.

Asian countries such as Singapore, Japan, South Korea and Thailand are opting for a third way approach to reopen their economies, rejecting the “freedom day” tone of the US and Europe, as well as the isolationist approach of China and Hong Kong. “These countries are now moving away from the zero-covid approach towards a preventive approach that emphasizes vaccinations and other measures, such as wearing masks and washing hands,” said a director of advisory group Bower Group Asia. “The approach may slow recovery initially, but it is certainly better than lockdowns, and the pace should accelerate if high vaccination levels keep hospitalization and death rates low.”

Need to know: business

Marks and Spencer shares jumped this morning after the UK retail clock raised its earnings forecasts. The half-year profit exceeded expectations, reaching £187 million, up 18 per cent over the same period in 2019/20. Last year the group made a loss of £87 million. Online sales are now 34 percent of the total, reflecting the shift to e-commerce during the pandemic.

Global travel boom boosted revenues to Emirates at 86 percent, the Dubai-based airline is helping cut its half-year losses to $1.6 billion. UK Airports have urged the government to bring back rules, lifted during the pandemic, forcing airlines to use or lose their valuable take-off and landing slots.

Quarterly profit almost doubled at Infineon, Europe’s largest chipmaker, thanks to strong global demand for semiconductors. The profit of the Munich-based company, which depends on the auto industry for more than 40 percent of its turnover, came in at a record €464 million, compared to €245 million in the previous quarter.

Shares in BioNTech Soared yesterday after the German company, which launched the first Covid-19 vaccine with US pharmaceutical giant Pfizer, raised its revenue forecast for the shot to €17 billion this year, €1 billion higher than previously estimated. AstraZeneca, which has suffered setbacks with its Covid shot — which has yet to be approved by US regulators — announced it was creating a division dedicated to vaccines and antibody therapies.

Brokers like Savills and home builders like persimmon posted strong sales amid a vibrant UK housing market, where the average property price passed £270,000 for the first time last month. Demand is also strong in many other countries where low interest rates have reduced the cost of mortgages, but can house prices begin to fall once interest rates rise?

Column chart of the number of countries showing real house prices in most countries

The world of work

Trusting your staff to take as much time off as they need to rest after the trauma of the pandemic is a worthy goal, but what would it be like in reality? The new edition of our Working on podcast discusses a radically unlimited vacation experiment.

Columnist Sarah O’Connor investigates why more elderly have begun to leave the workforce since the pandemic hit, against the trend of the past two decades, steadily increasing the proportion of older people still participating in the labor market.

Covid cases and vaccinations

Total number of cases: 250.3 m

Get the latest global photo with our vaccine tracker

And finally…

. . . Or rather, not yet. From the quest for immortality to treating diseases of old age, our new collection showcases the latest advances in the quest for a longer (and healthier) life.

© Celina Pereira

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