German price increases hit record high on food and energy rises; US to announce inflation rate – business live

Craig Botham, chief China + economist at Pantheon Macroeconomics, said currency weakness, food and energy underpinned the greater-than-expected jump in consumer price inflation in China.

Currency weakness, and stress in global commodity markets, were the main drivers of the large increase in Chinese consumer price inflation for April. Food inflation surged to 1.9% y/y in April, from -1.5% in March, despite continued pork deflation, thanks to higher grain and vegetable prices. Energy inflation is not reported, but we estimate it rose to 34.3% y/y, from 31.7%, despite a pullback in global crude prices in April. Services inflation, however, slowed to 0.8% y/y, from 1.1% in March, and core inflation dipped to 0.9%, from 1.1%, as zero-Covid restrictions bit into domestic demand.

Inflationary pressure from higher global commodity prices has been exacerbated by the recent fall in the renminbi, which weakened against the dollar by around 4% over the month. We expect this to contribute to continued elevated food and energy prices in May, even as zero-Covid continues to drag on core inflation.

We remain of the view that inflation – still well below its 3% target – is not a meaningful constraint on People’s Bank of China action. Policy will remain more focused on the deleterious position of growth – hinted at by slowing core inflation – and the plunge in the currency.

News that some hayfever medicines are in short supply has led to soaring sales of those products, a UK pharmacy chain reports.

A shortage of the active ingredient, chlorphanemine maleate, has meant that some of the big highstreet pharmacy chains, including Boots and Superdrug, are out of stock of Piriton and Piriteze tablets, both made by GlaxoSmithKline. However, Boots stressed that only four of its 90 hayfever medicines are affected.

Chemist4U reports today that sales of products containing chlorphenamine were up by 307% and sales of Piriton products were up by 61% between 8 and 9 May, when news of the shortage broke.

James O’Loan, chief executive and prescribing pharmacist of Chemist4U, said

Chlorphenamine is an antihistamine used in hay fever and allergy treatments, primarily Piriton. It’s an older antihistamine, so it’s more likely to make you feel drowsy than other similar allergy medicines. There are many antihistamines on the market, so we’re not too worried about a shortage of this particular treatment.

Antihistamines all work in the same way and are all very effective remedies for hay fever symptoms. In fact, most newer antihistamines, such as loratadine or cetirizine, are less likely to make you feel sleepy and may be a better fit for some patients. However, if you regularly use chlorphenamine to reduce your hay fever symptoms and are unsure about other treatment options available, you should speak to your GP or local pharmacist. They will be able to recommend other antihistamines you could try instead.

While we have noticed an increase in sales of chlorphenamine and Piriton products over the past few days, we don’t see any reason to panic. This could simply have happened because hayfever season is upon us and many of us are stocking up ahead of time. Stock of chlorphenamine is coming, and other treatments are available to fill the gap for any patients who find themselves in need.

A Piriton tablet on blades of grass
A Piriton tablet on blades of grass Photograph: David Levene/The Guardian

Pricey cooking oil (which helped push German inflation to a record high last month) is a global issue: Indonesians also struggle with massive price rises, as freelance journalist Gemma Holliani Cahya reports for the Guardian.

As millions of Indonesians travelled to their hometowns to celebrate Eid al-Fitr, one common struggle was being discussed in most family gatherings: the price of cooking oil.

“I always host Eid al-Fitr celebrations for my big family. I cook everything for around 20 of us. But this year is the first time I had to ask them to chip in because everything is so expensive, especially the oil, and I really can’t handle it on my own,” Ellifa Kartini said.

European markets have opened higher, as expected.

The UK’s FTSE 100 is 39 points ahead at 7,282, a 0.55% gain. The French market is 1.1% ahead, Spain’s Ibex is up 0.6% and the Italian market has risen 0.8%, while the German Dax has edged up 0.3%. The Euro Stoxx index has climbed 0.9% in early trading.

On the oil market, Brent crude has gained 2.6% to $105.13 a barrel, while US light crude is trading at $102.2 a barrel.

Here’s a round-up of today’s other news.

Boris Johnson was accused of being “bereft of ideas or purpose,” after a Queen’s speech that included 38 new bills but offered no specific measures to tackle the immediate cost of living crisis.

Instead, the speech, delivered by the Prince of Wales amid the pomp of the state opening of parliament, included plans to tear up the Human Rights Act, make it harder for councils to rename streets and privatise Channel 4.

A windfall tax on North Sea oil and gas operators could raise more than £2bn to cushion the pain of rising energy bills.

Analysis by the Labour party – which has called for the one-off levy – reveals that it could rake in at least £1.95bn for the Treasury, far more than the £1.2bn the party forecast in January.

Profits on North Sea oil and gas firms are taxed at 30% corporation tax plus a 10% surcharge. Labour has proposed hiking the combined rate from 40% to 50%.

A mechanism allowing universal credit payments to be cut by up to 25% is driving people into poverty and debt, a report by the Lloyds Bank Foundation has found.

Cuts to benefits are often to recoup advances given during the set-up period and to settle outstanding debts – but they are not means-tested.

Last night, Elon Musk said he will reverse Twitter’s ban on the former US president Donald Trump if the Tesla boss completes a takeover of the social media platform.

Twitter permanently banned Trump in January 2021, citing repeated violations of company rules and its judgment that his tweets were “highly likely to encourage and inspire people to replicate the criminal acts that took place at the US Capitol on 6 January 2021”, referring to the attack on the building by his supporters.

Apple has discontinued the iPod more than 20 years after it was launched.

The most recent iteration of the music player, the iPod Touch, has not been updated since 2019, and many of its features are now available on other products.

Apple said it would continue to sell the Touch, the only generation of the iPod still on sale, “while supplies last”.

An Adidas campaign featuring dozens of sets of breasts to promote the diversity of its range of sports bras has been banned by the UK advertising watchdog for using explicit nudity and appearing where children could see the ads.

Channel 4 is to make available 1,000 hours of hit shows from Location, Location, Location to SAS: Who Dares Wins on YouTube in the widest-ranging commercial deal the Silicon Valley giant has struck with a UK broadcaster.

Coldplay have been branded “useful idiots for greenwashing” after announcing a partnership with the Finnish oil company Neste to halve their touring emissions last week.

Introduction: German inflation rises to new record, US inflation in focus

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Today the markets will be focused on US inflation, out at lunchtime. Just out now: Inflation in Germany, Europe’s biggest economy, hit a new record high in April, pushed higher by food and energy prices.

The annual rate rose to 7.4% from 7.3% in March. The German statistics office said the main factor in March was higher energy prices, but this time round it flagged above-average increases in food prices. “This is where the impact of the war in Ukraine is becoming more and more visible.”

Food prices rose 8.6% across all areas: prices for fats and oils jumped 27.3% amid panic-buying of vegetable oil at German supermarkets, while meat and meat products rose 11.8%, dairy products and eggs went up 9.4% in price and fresh vegetables became 9.3% dearer.

Energy products prices soared again, by 35.3%, compared with March’s 39.5% increase.

Georg Thiel, president of the Federal Statistics Office, said:

The inflation rate thus reached an all-time high for the second month in a row since German reunification.

Energy prices, in particular, have increased considerably since the war started in Ukraine and have had a substantial impact on the inflation rate. A similarly high inflation rate was last recorded in the former territory of the Federal Republic in autumn 1981 when mineral oil prices had sharply increased, too, as a consequence of the first Gulf war between Iraq and Iran. Additional factors are delivery bottlenecks due to interruptions in supply chains caused by the Covid-19 pandemic and the marked price increases at upstream stages in the economic process.

Here in Britain, the picture is similarly bleak.

A respected UK think tank warns today that more than 250,000 households will “slide into destitution” next year, taking the total number in extreme poverty to around 1.2m, unless the government acts to help the poorest families hit by the energy price shock,

The National Institute for Economic & Social Research said more than 1.5m households will see the rise in food and energy bills outstrip their disposable income, forcing them to rely on savings or extra borrowing to make up the shortfall, said the thinktank, which blamed welfare spending cuts since the Brexit vote in 2016 for leaving millions of families in a vulnerable financial position.

Michael Hewson, chief market analyst at CMC Markets UK, said the German inflation number will reinforce

the calls yesterday from Bundesbank President Joachim Nagel who said he would be pushing for the European Central Bank to hike rates at its July meeting, a call he is expected to repeat later today at a capital markets day in Berlin. It will be interesting to note how his remarks will be received by ECB President Christine Lagarde when she speaks later today in Slovenia.

We finish up with US CPI for April, in the wake of last week’s decision by the Federal Reserve to raise rates by 50 basis points. Whatever today’s number comes in at, there seems little prospect that we won’t see another 50bps rate rise in June, even if the numbers come in below expectations.

The Federal Reserve has already said it will go for successive 50bps rate hikes at the next two meetings, as well as announcing the process of balance sheet reduction, starting next month at $47.5bn a month, increasing to $95bn a month by September. Expectations are for headline CPI to slip back to 8.1%, and core prices to 6.1%.

In China, factory gate inflation eased to the slowest rate in a year in April, with the annual rate in producer prices falling to 8% from 8.3% in March. The consumer prices index rose at its fastest pace this year, 2.1%, up from 1.5%, but is still below the levels it was at late last year.

US stocks managed to eke out some small gains yesterday after the big declines earlier this week. But trading was choppy, and it could have gone either way, said ING analyst Iris Pang.

Asian shares rose after trading close to two-year lows the previous day, and the dollar held steady ahead of the US inflation data.

China’s blue-chip index CSI 300 rose 2.3% after producer prices rose at the slowest pace in a year, leaving room for more fiscal stimulus to shore up the Covid-battered economy. The Hong Kong market rose 1.4% while Australia was little changed. European shares are also expected to open higher.

The Agenda

  • 9am BST: ECB president Christine Lagarde speaks in Slovenia
  • 1.30pm BST: US Inflation for April (forecast: 8.1%)


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