Closing post
Time for a recap
Stock markets have slumped on both sides of the Atlantic after inflation in America surged unexpectedly to a new 40-year high.
Britain’s FTSE 100 has tumbled 2% to a three-week low, with miners, technology firms and hospitality companies among the big fallers, as recession fears mounted.
The pan-European Stoxx 600 is off around 2.5%, as is the S&P 500 in New York.
Economists predicted that America’s Federal Reserve would press on with sharp increases in interest rates in an attempt to cool inflation, with an increase of at least 50-basis points expected next week.
US gasoline prices jumped 4.1% last month, and were nearly 50% higher than a year ago, while food prices have jumped 12% since last May and air fares are up nearly 40% in a year.
Inflation accelerated on a monthly basis, up 1% in May alone:
🇺🇸It's hot again!
— Gregory Daco (@GregDaco) June 10, 2022
🟢#CPI +1.0% (faster m/m)
🔥Core CPI +0.6% (faster)
🍲Food +1.2% (faster)
⛽️Energy +3.9% (gas +4.1%)
🔥Goods 1.3%
🚗New +1.0%
🚘Used +1.8%
👕Apparel +0.7%
🔥Services +0.8%
🏠Shelter +0.6%
⚠️Rent +0.6%
⚠️OER +0.5% (record since '90)
🛫 +12.6%
🏨Hotels 1.0% pic.twitter.com/Vy09oTjhRU
The jump in inflation piles more pressure on president Biden, as the war in Ukraine continues to drive up energy prices and create supply chain disruption. Here’s the full story:
US consumer sentiment has slumped to a record low, mainly due to inflation hitting households.
Anxiety about the cost of living crisis is also rising in the UK. Three-quarters of adults are worried about it, and over 40% have cut back on food spending.
Women, those with disabilities and parents with young children are most anxious about the impact of rising prices..
Nurses are facing a £1,600 real-terms wage cut under plans being considered by the government for this year’s pay rise, with ministers expected to offer an increase of just 3% for NHS staff in England despite the soaring cost of living.
Petrol and diesel hit record levels again at UK forecourts, pushing up the cost of filling the average UK petrol car further over £100.
The AA recommended that drivers cut out shorter journeys.
Russia has cut interest rates back to levels before the Ukraine war. The Central Bank of Russia lowered its key lending rate from 11% to 9.5%, in an effort to support its economy.
The UK’s largest banks are no longer “too big to fail” and could foot the bill for their own failures, the Bank of England has said, but it found shortcomings at three banks including HSBC and Lloyds.
The UK competition watchdog is considering launching an investigation into Apple and Google’s dominance of the mobile browser market after finding the tech companies have a “stranglehold” on a range of areas including app stores.
Hiring at UK firms has slowed. UK employers increased the number of new staff in May at the slowest pace since early 2021 after a steep fall in the number of workers responding to job adverts.
Full story: US inflation hits 40-year high of 8.6% as food, gas and shelter costs rise
Inflation rose to a four-decade high in the US in May, rising 8.6% from a year ago, the labor department said on Friday.
The latest consumer price index (CPI) figures showed that the cost of living increased 1% from April and was broad-based, with the indexes for shelter, gasoline and food being the largest contributors.
Gas prices have been soaring across the US, approaching $5 a gallon this week – $1.90 more than a year ago. According to the latest CPI report the energy index rose 3.9% over the month, with the gasoline index rising 4.1%. Other major component indexes also increased. The food index rose 1.2% in May as the food at home index increased 1.4%.
May’s rise was driven by sharp increases in energy costs, which rose 34.6% from a year earlier, and groceries, which jumped 11.9% on the year. Food and energy prices are more volatile than other categories included in the CPI, and the labor department publishes a “core prices” index which excludes them. It rose 0.6% from April.
Inflation fears have battered Joe Biden’s poll numbers and his administration has sought to blame Russia’s invasion of Ukraine for rising prices. The war in Ukraine and the continuing disruption to global trade caused by the coronavirus pandemic have both contributed to rising prices for food and energy. But there were worrying signs of inflation spreading.
Shelter costs were up 5.5% compared with a year ago. After three months of declines, prices for used cars and trucks rose 1.8% in May from April and are up 16.1% over the year.
