Closing summary: How fast will inflation fall in 2023?
We know that 2022 was a difficult year for the global economy: Russia’s invasion of Ukraine pushed up energy prices, driving a jump in inflation which has made households around the world poorer in real terms.
Inflation is here to stay in Europe and Latin America, according a unanimous consensus of 22 senior economists surveyed by the World Economic Forum, which runs this week’s shindig for the great and the good – or rather a load of politicians and businesspeople – in Davos, Switzerland. The proportion of respondents expecting high inflation in Europe has increased from 47% to 57% since September, while for the US, it has declined sharply from 43% to 24%.
The pace of disinflation (a slowing rate of inflation) will be crucial this year in proving whether the same economists are correct that a global recession is inbound. Two-thirds of the 22 said they thought it was likely to be the case.
For investors easing inflationary pressure could mean rising asset prices, with central banks less likely to raise interest rates as fast or as far.
But it is looking like it will be another day on which the FTSE 100 hits a new record high – barring a move after publication of this post. It gained 0.1% on Monday to reach 7,852 points with less than 90 minutes of trading remaining. Another 50 points and it will be there.
Craig Erlam, a market analyst at Oanda, a currency trading website, said:
It’s been quite a frantic start to the year so investors may be capitalizing on the opportunity to catch their breath. They won’t have long given the flurry of central bank speak as policymakers gather in Davos this week and as earnings season heats up in the US.
There’s certainly an increasing sense of optimism about 2023 as we make our way through the opening month of the year. The economic data has been kind, to say the least, which is not something we were afforded for the vast majority of the year just gone.
The question now is whether earnings season will enhance that new sense of hope or spoil the party before it really gets going.
Here are some other developments from the world of business and economics on Monday.
Marks & Spencer is to open 20 large stores and create 3,400 jobs as part of a £500m plan to rejuvenate its presence on the high street after bumper Christmas trading.
Britain’s most valuable fintech company, Revolut, is assembling a team to track whether staff are being “approachable” and “respectful”, as it tries to address criticism about an aggressive corporate culture and secure a UK banking licence.
The Olympics will remain on the BBC until at least 2032 after a new deal with rights holders that guarantees wider free-to-air coverage by broadcasters across Europe.
The UK foreign secretary, James Cleverly, and the European Commission’s vice-president, Maroš Šefčovič, have committed to more talks to resolve the dispute over Brexit trading arrangements in Northern Ireland.
Residents of flats with communal heating systems could mount a legal claim against their network operators after experiencing rises of up to 700% in their bills.
You can continue to follow the Guardian’s live coverage from around the world:
In the UK, Nicola Sturgeon says it would be ‘outrage’ for UK government to block Scotland’s gender recognition reform bill
In our coverage of the Russian invasion of Ukraine, the Dnipro death toll rises after a missile attack, reports say; Kremlin claims UK tanks for Ukraine ‘will burn’
Thanks for reading today, and please do join us tomorrow for more live coverage of business, economics and financial markets – live from Graeme Wearden in Davos. JJ
Something from earlier: Sainsbury’s has joined the rush to provide almost-instant home shopping by signing a deal with the food delivery app Just Eat to offer the rapid distribution of groceries from 175 stores.
Under the deal, outlets in London, Edinburgh and Bristol will provide the service from the end of February offering a choice of 3,000 items delivered in less than 30 minutes. Sainsbury’s already offers its own Chop Chop fast delivery service and has partnerships with Deliveroo and Uber Eats.
The partnership follows Just Eat’s earlier tie-ins with Asda and the Co-op to deliver groceries, while all three grocery chains are already working with Deliveroo alongside Morrisons and Waitrose.
You can read the full story here:
