Inflation – Business News Updates https://newsdaily.business Wed, 25 Jan 2023 05:26:38 +0000 en hourly 1 https://wordpress.org/?v=6.4.3 https://newsdaily.business/wp-content/uploads/2021/02/cropped-handshake-hand-gesture-dollar-money-finance-coin_96px-32x32.png Inflation - Business News Updates https://newsdaily.business 32 32 Inflation Tops 50% As Iran Starts Offering Gold On Stock Market https://newsdaily.business/2023/01/25/inflation-tops-50-as-iran-starts-offering-gold-on-stock-market/ https://newsdaily.business/2023/01/25/inflation-tops-50-as-iran-starts-offering-gold-on-stock-market/#respond Wed, 25 Jan 2023 05:26:38 +0000 https://newsdaily.business/2023/01/25/inflation-tops-50-as-iran-starts-offering-gold-on-stock-market/ Despite haphazard state measures such as injecting dollars into the currency market and selling gold on the stock market, inflation is soaring and the rial maintains a downward trend.  The point-to-point inflation rate reported by the Statistical Center of Iran (SCI) for the past Iranian month, which ended on January 20, has surpassed 50 percent, […]]]>


Despite haphazard state measures such as injecting dollars into the currency market and selling gold on the stock market, inflation is soaring and the rial maintains a downward trend. 

The point-to-point inflation rate reported by the Statistical Center of Iran (SCI) for the past Iranian month, which ended on January 20, has surpassed 50 percent, with food inflation hitting an average of over 70 percent. 

The SCI put overall inflation at 51 percent, taking into account 12 groups of goods and services. The highest jump was reported in the hotel and restaurant sector with 78.5 percent, followed by food. 

The SCI announced food inflation to be over 70 percent, considering the rise in prices of bread and cereals, red meat, dairy products, fruits, etc. The inflation for edible oils and fats was about 248 percent in comparison with the corresponding period of the previous year. Most of the rise was due to the government’s elimination of subsidies for essential goods – factored in the supply chain in the form of cheap dollars for importers. The lowest inflation in the group of food items was reported for tea, coffee, cocoa, soft drinks and fruit juice with an average of 32 percent. 

Medicines and healthcare services recorded a 54-percent increase followed by price increases for transportation and clothing with 46.9 and 45.7, respectively. 

The figures indicated a slower rise in prices as the inflation of food items even reached 100 percent in some provinces in previous months. Most price increases happened since early May when the government scrapped a food import subsidy to save around $15 billion annually. The move immediately triggered a massive rise in prices for basic food staples, such as bread, dairy products, cooking oil and meat. Although the government has repeatedly said its oil exports are steadily increasing despite sanctions by the United States, economic conditions keep deteriorating, with Iran’s battered currency, the rial, hitting historic lows in recent months.

The government has taken a slew of measures in the past months to curb inflation and control the freefall of the rial. It replaced the governor of the central bank about a month ago, and has kept injecting dollars into the market to balance out demand. On Tuesday, it started offering gold coins on the stock market and also launched a system for nominally fixed exchange rates for its nosediving currency, which has lost at least 50 percent of its value since mid-2021. 

On Tuesday, one dollar was exchanged for over 440,000 rials to the US dollar, bouncing back from a low of 450,000 in the past couple of days. 

The government started selling gold on the stock market in the form of securities. As per the plan, people can buy up to five gold coins weighing about two grams each (called quarter gold coins in Iran as a full gold coin is about eight grams) at current prices, but they only receive a document for their purchase and will have to wait until the government announces the date when they can receive their coins. People tend to rush for such governmental schemes because by the time they get their coins, the price will be higher as the rial falls, and they can gain a little profit. This way the government gets large amounts of money and only gives people some certificates for their purchase. The government plans to sell 450,000 of these two-gram coins on the stock market in the next 10 days. This will amount to nearly a ton of gold.

Moreover, this week, the government pumped $305 million into the currency market over two days, after rial fell to a historic low of 450,000 against the US dollar.

Earlier in the week, the parliament approved the outlines of the budget bill for the next Iranian year – starting March 21 — without considering its unrealistic assumptions. The deficit in the current budget that the government admits is about 4,760 trillion rials – more than ten billion dollars. But the real deficit will be perhaps twice as much, with rosy estimates of oil sales and staggering tax collection.



Read More:Inflation Tops 50% As Iran Starts Offering Gold On Stock Market

2023-01-25 00:58:40

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The 2021 surge in global shipping costs was a canary in the coal mine for the persistent rise in inflation https://newsdaily.business/2023/01/24/the-2021-surge-in-global-shipping-costs-was-a-canary-in-the-coal-mine-for-the-persistent-rise-in-inflation/ https://newsdaily.business/2023/01/24/the-2021-surge-in-global-shipping-costs-was-a-canary-in-the-coal-mine-for-the-persistent-rise-in-inflation/#respond Tue, 24 Jan 2023 17:25:54 +0000 https://newsdaily.business/2023/01/24/the-2021-surge-in-global-shipping-costs-was-a-canary-in-the-coal-mine-for-the-persistent-rise-in-inflation/ 5 min (1403 words) Read The 2021 surge in global shipping costs was a canary in the coal mine for the persistent rise in inflation It bears remembering that, as recently as the second half of 2021, the Federal Reserve considered that the surge in consumer price inflation would dissipate, with price increases returning […]]]>



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The 2021 surge in global shipping costs was a canary in the coal mine for the persistent rise in inflation

It bears remembering that, as recently as the second half of 2021, the Federal Reserve considered that the surge in consumer price inflation would dissipate, with price increases returning to the Fed’s 2 percent target in 2022. In testimony before Congress, Fed Chair Jerome Powell affixed the now infamous “transitory” moniker to the ongoing price increases, which he ascribed to temporary supply bottlenecks and price declines in the early stages of the pandemic.

The Fed rejected the notion that price increases reflected an overheated economy—a view that was nevertheless already making the rounds in certain segments of Congress—and did not foresee any tightening before 2023 or 2024. New York Federal Reserve Bank President John Williams, who also serves as vice chair of the Fed’s policymaking committee, expected inflation to run at about 2 percent in both 2022 and 2023.

The Fed was not alone in misreading the implications of the data already available in 2021. The IMF, whose mandate is to take an independent view of developments and policies in member countries, described the inflationary surge in a blog by its (then) chief economist, Gita Gopinath, in the same terms as the Fed, pointing to transitory causes and taking comfort in the anchoring of inflation expectations. Like the Fed, the IMF did not mention in its updates the possibility of economic overheating and inflation persistence.

Fast-forward to spring 2022: the IMF’s World Economic Outlook revealed that the institution’s inflation projections were off by a factor of more than 3 for advanced economies and 2 for all other countries. These facts show that the inflation surprise was global.

To be fair, there were factors that were not foreseeable in 2021, such as supply chain disruptions related to China’s zero-COVID policy and commodity price increases owing to Russia’s invasion of Ukraine. There were also factors whose impact was difficult to predict with precision—for example, the unwinding of pandemic-era savings, which boosted demand. Economic forecasters, whether at the Fed or at the IMF, are not geopolitical or public health experts, and often the best they can do is to make an educated guess.

But while policymakers may get a pass for not factoring into their decisions what was unknowable a year ago, they should be held accountable for missing known drivers of inflation, especially those that pointed to enduring price pressures. It’s likely that the Fed has had to hike interest rates further to make up for its delayed start. Recession risks are very plausibly larger as a result, as are the adverse global spillovers from Fed policy.

So was there a smoking gun? In a recent study, my coauthors and I focus on a key driver of global inflation that was very evident already in 2021: the rapid increase in global shipping costs. By October 2021, indicators of the cost of shipping containers by maritime freight had increased by over 600 percent from their pre-pandemic levels, while the cost of shipping bulk commodities by sea had more than tripled.

What caused this remarkable increase? As manufacturing activity picked up following extended COVID-19 lockdowns, demand for shipping intermediate inputs (such as energy and raw materials) by sea increased significantly. At the same time, shipping capacity was severely constrained by logistical hurdles and bottlenecks related to pandemic disruptions and shortages of container equipment. Ports around the world lacked workers, who had to self-isolate after testing positive for COVID-19, and public health restrictions prevented truck drivers and ship crews from crossing borders.

While skyrocketing food and energy prices were making headlines, the surge in shipping costs seemed to pass largely under the radar, despite its potential inflationary impact. Our analysis suggests that a doubling of shipping costs causes inflation to increase by roughly 0.7 percentage point. Given the actual increase in global shipping costs during 2021, we estimate that the impact on inflation in 2022 was more than 2 percentage points—a huge effect that few central banks would dismiss.

Our study also shows that the effect of the shipping cost shock on inflation is longer-lasting than the effects of commodity price shocks, peaking after about a year and lasting up to 18 months. By contrast, the impact of global oil prices on consumer price inflation peaks after only two months.

Of course, this average result varies across economies and regions, and it depends on monetary policy frameworks, particularly central banks’ track record of stabilizing prices and anchoring expectations, as well as on more structural features such as geography (which affects an economy’s remoteness and dependence on goods shipped by sea).

Our evidence suggests that the impacts of surging shipping costs are likely to be larger and more persistent in countries with less-anchored inflation expectations and weaker monetary policy frameworks. Lower-income countries and some emerging market economies may be more at risk than advanced economies with established price stability credentials.

Inflation

Remote small-island states in the Pacific and the Caribbean are the most affected, according to our study’s results, with an inflationary transmission that is about double the average in the sample as a whole. This amplifies risks of wage-price spirals in such countries (a loop in which inflation leads to higher wage growth, fueling even higher inflation). When shipping costs surge, policymakers everywhere, but especially in such countries, may need to tighten their monetary policy preemptively.

The pandemic spike in shipping costs is more than a year behind us, and our research suggests that we should already have seen most of its inflationary impact by now. Our estimates, moreover, are symmetric, such that declines in shipping costs would tend to bring inflation down in the following year. The implication is for the big moderation in shipping costs in 2022 to contribute to a reversal of inflationary pressures.

Shipping costs’ role as a driver of global inflation is underrecognized. This needs to change. Shipping cost shocks can alert central banks tasked with ensuring price stability of dangers ahead and help them reduce the risk of once again falling behind the curve.


JONATHAN D OSTRY is professor of the practice of economics at Georgetown University and the former acting director of the IMF’s Asia and Pacific department.


Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.

References:

Carrière-Swallow, Y., P. Deb, D. Furceri, D. Jiménez, and J. D. Ostry. 2023. “Shipping Costs and Inflation.” Journal of International Money and Finance 130 (February).



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The 2021 surge in global shipping costs was a canary in the coal mine for the persistent rise in inflation

2023-01-24 17:04:32

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There’s beeen an increase in egg smuggling attempts across the border, says San Diego Customs https://newsdaily.business/2023/01/23/theres-beeen-an-increase-in-egg-smuggling-attempts-across-the-border-says-san-diego-customs/ https://newsdaily.business/2023/01/23/theres-beeen-an-increase-in-egg-smuggling-attempts-across-the-border-says-san-diego-customs/#respond Mon, 23 Jan 2023 00:00:52 +0000 https://newsdaily.business/2023/01/23/theres-beeen-an-increase-in-egg-smuggling-attempts-across-the-border-says-san-diego-customs/ CNN  —  High prices are driving an increase in attempts to bring eggs into the US from Mexico, according to border officials. Officers at the San Diego Customs and Border Protection Office have seen an increase in the number of attempts to move eggs across the US-Mexico border, according to a tweet from director of […]]]>




CNN
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High prices are driving an increase in attempts to bring eggs into the US from Mexico, according to border officials.

Officers at the San Diego Customs and Border Protection Office have seen an increase in the number of attempts to move eggs across the US-Mexico border, according to a tweet from director of field operations Jennifer De La O.

“The San Diego Field Office has recently noticed an increase in the number of eggs intercepted at our ports of entry,” wrote De La O in the Tuesday tweet. “As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000.”

Bringing uncooked eggs from Mexico into the US is illegal because of the risk of bird flu and Newcastle disease, a contagious virus that affects birds, according to Customs and Border Protection.

An image from Customs and Border Protection shows eggs that a traveler attempted to bring into the United States on January 18 at the Paso Del Norte internal crossing in El Paso, Texas.

In a statement emailed to CNN, Customs and Border Protection public affairs specialist Gerrelaine Alcordo attributed the rise in attempted egg smuggling to the spiking cost of eggs in the US. A massive outbreak of deadly avian flu among American chicken flocks has caused egg prices to skyrocket, climbing 11.1% from November to December and 59.9% annually, according to the Bureau of Labor Statistics.

The increase has been reported at the Tijuana-San Diego crossing as well as “other southwest border locations,” Alcordo said.

For the most part, travelers bringing eggs have declared the eggs while crossing the border. “When that happens the person can abandon the product without consequence,” said Alcordo. “CBP agriculture specialists will collect and then then destroy the eggs (and other prohibited food/ag products) as is the routine course of action.”

In a few incidents, travelers did not declare their eggs and the products were discovered during inspection. In those cases, the eggs were seized and the travelers received a $300 penalties, Alcordo explained.

“Penalties can be higher for repeat offenders or commercial size imports,” he added.

Alcordo emphasized the importance of declaring all food and agricultural products when traveling.

“While many items may be permissible, it’s best to declare them to avoid possible fines and penalties if they are deemed prohibited,” he said. “If they are declared and deemed prohibited, they can be abandoned without consequence. If they are undeclared and then discovered during an exam the traveler will be subject to penalties.”





Read More:There’s beeen an increase in egg smuggling attempts across the border, says San Diego Customs

2023-01-22 22:32:00

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Australia’s Inflation to Rise in Q4 https://newsdaily.business/2023/01/22/australias-inflation-to-rise-in-q4/ https://newsdaily.business/2023/01/22/australias-inflation-to-rise-in-q4/#respond Sun, 22 Jan 2023 11:18:57 +0000 https://newsdaily.business/2023/01/22/australias-inflation-to-rise-in-q4/ The effects of the Fed’s hawkish policies are becoming more apparent. Employment in Australia surprisingly decreased in December. There is also a 60% chance that the RBA will increase interest rates. The AUD/USD weekly forecast is bullish as investors expect a rise in Australia’s inflation, which warrants more rate hikes. –Are you interested to learn […]]]>


  • The effects of the Fed’s hawkish policies are becoming more apparent.
  • Employment in Australia surprisingly decreased in December.
  • There is also a 60% chance that the RBA will increase interest rates.

The AUD/USD weekly forecast is bullish as investors expect a rise in Australia’s inflation, which warrants more rate hikes.

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Ups and downs of AUD/USD

Australia and the United States released a ton of data last week, influencing price changes for the AUD/USD pair. The US retail sales and housing figures indicated a slowing economy as the effects of the Fed’s hawkish policies became more apparent. The PPI report came in lower than anticipated, indicating further easing inflation.

While the unemployment rate remained close to five-decade lows, employment in Australia surprisingly decreased in December after a large increase the previous month.

According to Lauren Ford, chief of labor statistics at the ABS, strong employment growth through 2022, high participation, and low unemployment continue to suggest a tight labor market.

This resilience is a significant factor in the market’s willingness to anticipate that the Reserve Bank of Australia (RBA) will increase its 3.1% cash rate by another quarter point at its upcoming meeting.

Futures suggest a 60% chance of an increase, but there is also a 40% chance that the RBA will halt.

Next week’s key events for AUD/USD

AUD/USD weekly forecast
AUD/USD weekly forecast

Next week, investors will pay attention to inflation data from Australia that will affect the RBA’s next move. Markets expect Australia’s inflation to go up 7.5% from 7.3%. There will also be GDP data from the US that will show the state of the economy amid rising interest rates.

AUD/USD weekly technical forecast: Bulls gearing up for another week

AUD/USD weekly forecast
AUD/USD weekly forecast

The daily chart shows AUD/USD in a bullish trend, with the price staying mostly above the 22-SMA and the RSI above 50. Bulls gathered enough strength to break above the 0.6875 resistance level before pausing at the 0.7051 key level.

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At this point, bears came in for a retracement move that saw the price retesting the recently broken 0.6875 resistance as support. The price is pushing off this support, showing that bulls are still in charge. 

Therefore, the price will likely retest and break above the 0.7051 resistance in the coming week. A bullish bias will remain if the price stays above the 22-SMA and the RSI above 50.

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2023-01-21 18:28:00

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Postage stamps cost more starting Sunday https://newsdaily.business/2023/01/21/postage-stamps-cost-more-starting-sunday/ https://newsdaily.business/2023/01/21/postage-stamps-cost-more-starting-sunday/#respond Sat, 21 Jan 2023 05:49:43 +0000 https://newsdaily.business/2023/01/21/postage-stamps-cost-more-starting-sunday/ The United States Postal Service is raising the price of stamps Jan. 22. Photo: Luke Sharrett/Bloomberg via Getty Images The price of postage stamps increases Sunday for the third time in nearly 17 months. Costs to send a letter by certified mail and insure packages will also increase. Why it matters: Inflation has pushed prices […]]]>


Sign that says United States Post Office

The United States Postal Service is raising the price of stamps Jan. 22. Photo: Luke Sharrett/Bloomberg via Getty Images

The price of postage stamps increases Sunday for the third time in nearly 17 months. Costs to send a letter by certified mail and insure packages will also increase.

Why it matters: Inflation has pushed prices higher on just about everything and the U.S. Postal Service says the first-class mail increase of about 4.2% will “offset the rise in inflation.”

  • Effective Jan. 22, USPS will also increase money order fees and rental fees for P.O. boxes.
Postage price increases

Details: With the new rates, postage for a 1-ounce letter is 63 cents, up from 60 cents.

  • Metered 1-ounce letters are 60 cents, up from 57 cents.
  • Postcards sent domestically are 48 cents, up from 44 cents.
  • International postcards and 1-ounce letters are $1.45, a 5-cent increase.
  • The certified mail fee, which is in addition to postage and other fees, increases from $4 to $4.15. The fee with an adult signature increases 45 cents from $10.35 to $10.80.
Forever stamp price increase

Flashback: The Postal Service first started selling Forever stamps in 2007, when they cost 41 cents.

Our thought bubble: Forever stamps help lock in current prices to avoid feeling the impact of rate increases.

  • Someone with the original 2007 Forever stamps is saving 22 cents with every letter they mail after Sunday.
  • And if you still have 2018 Forever stamps that cost 50 cents each, you’ll save 13 cents with the old stamps.
Stamp prices in the future

What’s next: More price increases are expected as part of Postmaster General Louis DeJoy’s 10-year Delivering for America plan “to achieve financial sustainability.”

What they’re saying: “In less than a decade, Americans could be paying well over $1 to mail a single letter,” Kevin Yoder, executive director of the advocacy group Keep US Posted and a former congressman, told Axios.

  • “The mailing industry needs to be prepared for continued use of our authority to raise prices on market dominant products at an uncomfortable rate,” DeJoy said at the May Postal Service Board of Governors meeting.
  • Jason Dies, an executive vice president at Pitney Bowes, said costs are also increasing for other carriers and that the increases will impact consumers if businesses don’t change their current shipping processes.
  • “Consumers are going to see higher shipping costs or slower delivery options with businesses looking to cut costs trying to maintain free shipping,” Dies told Axios.

More from Axios:



Read More:Postage stamps cost more starting Sunday

2023-01-20 23:02:59

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Inflation in perspective https://newsdaily.business/2023/01/20/inflation-in-perspective/ https://newsdaily.business/2023/01/20/inflation-in-perspective/#respond Fri, 20 Jan 2023 23:48:16 +0000 https://newsdaily.business/2023/01/20/inflation-in-perspective/ What is inflation, and how do we track it? In 2022 consumers felt the effects of rising prices, and as much as experts simplify the definition of inflation, the causes of it remain complex and in constant motion. However, looking back into other historical periods of inflation, we can see the range of causes and […]]]>


What is inflation, and how do we track it? In 2022 consumers felt the effects of rising prices, and as much as experts simplify the definition of inflation, the causes of it remain complex and in constant motion. However, looking back into other historical periods of inflation, we can see the range of causes and what can be done about it now.How does this round of inflation compare to others? To understand the scope of the rising prices, we need to see what causes them.In June 2021, the White House released an article examining comparable periods of inflation starting in 1946. From that time to the present era of inflation, they found six comparable inflationary episodes. The first being from 1946 to 1948, at the end of World War II. The elimination of price controls, supply shortages and pent-up demand led to inflation of around 20%. It also led to a considerable amount of saving, and after the war, a population of 140 million Americans purchased 20 million refrigerators, 21 million cars and 5.5 million stoves. The second period started around 1950 due to the Korean War when households were reminded of World War II and rushed to purchase goods. However, inflation did not jump as high this time.The third period occurred when a bustling economy with a GDP growth of 4.8 percent caused prices to rise. The rise stopped when president Nixon froze wages and prices.The fourth instance was due to surging oil prices in the ’70s and continued until 1982. supply shrank because of an oil embargo by the Organization of Arab Petroleum Exporting Countries and a decline in oil production due to the Iran-Iraq war. The fifth comparable instance was during the Gulf War. The uncertainty led to a short bout of high inflation on crude oil. The sixth and most recent bout of inflation was in 2008. Gas prices skyrocketed and doubled from the previous year, and CPI rose above 5%. The spike was driven by a surge in demand, financial unease and, again, tensions in the Middle East.By looking through the history of inflation, it is easy to see some common denominators in these time periods. The three most recent episodes largely involved oil, and more than half – including today’s surge – are due to war. Despite the similarities, the oil supply issues are not quite the same in every instance. The United States has become more of a petroleum exporter and uses more renewable energy sources today, becoming more energy independent. The rise seen from 1969-71 is also different. The growth of the economy at the time was relatively higher than present day. Which leaves the period after World War II as the closest parallel. Even though the wartime inflation caused supply shortages and great demand, there were no price controls. These controls reduced prices by 30% and, when lifted, made things like food rise 13.8% a month after. There is no perfect scenario from the past that can tell us how and when this bout of inflation will recede. However, the post-World War II period suggests it can quickly decline once supply chains are fully restored and demand levels off.Our modern case of inflation added new variables Our recent jump in inflation can be described somewhat as the perfect storm. Many small factors have compounded to create the rise in prices. The United States was still recovering from the ebbs and flows of the COVID-19 pandemic. For instance, when COVID-19 cases fell, restaurants filled. As COVID-19 cases rose, grocery store shelves emptied. These sectors were at the mercy of rapid swings in demand. However, when supply and demand started to even out, the war in Ukraine halted progress again and interjected new supply chain issues. The supply chain strains from the conflict compounded new transportation problems in the busy economy. Gas and oil restrictions branched off into indirect factors like trade restrictions. These can cause a butterfly effect like in the case of fertilizer. Russia’s suspension of fertilizer exports to the west resulted in farmers having to compensate. To make a profit, farmers have to keep a close eye on production costs. With the rise in demand for fertilizer, they must budget accordingly and thus use less, which reduces yields and quality. Our economic system is multifaceted and a seemingly small change, like not having access to fertilizer, created a huge repercussion for citizens. Are there active steps we can take to fight inflation?Many experts say there is little the government can do to curb inflation, though some efforts have been made. In August 2022, President Biden signed the Inflation Reduction Act that included a tax on high-income corporations, prescription drug reform and tax credits for clean energy. While these do attempt to push back against inflation, they are not a guarantee and also take time to make a larger impact. Raising interest rates can encourage consumers to spend less – decreasing demand – and the federal reserve has made efforts to do so. Interest rates increased seven times in 2022 to cool inflation. These increases came at a higher rate than others. Between 2015 and 2018, rates only increased nine times.Simple steps to fight inflationTo personally combat inflation, individuals can do things like holding off on big-ticket purchases, following a food spending plan and limiting driving through practices like batch errands. Knowing the details of inflation is one-half of the battle. Understanding the chain reaction of global events can put into perspective the delicate balance of the systems we are a part of and how they impact our everyday lives.

What is inflation, and how do we track it?

In 2022 consumers felt the effects of rising prices, and as much as experts simplify the definition of inflation, the causes of it remain complex and in constant motion. However, looking back into other historical periods of inflation, we can see the range of causes and what can be done about it now.

How does this round of inflation compare to others?

To understand the scope of the rising prices, we need to see what causes them.

In June 2021, the White House released an article examining comparable periods of inflation starting in 1946. From that time to the present era of inflation, they found six comparable inflationary episodes.

The first being from 1946 to 1948, at the end of World War II. The elimination of price controls, supply shortages and pent-up demand led to inflation of around 20%. It also led to a considerable amount of saving, and after the war, a population of 140 million Americans purchased 20 million refrigerators, 21 million cars and 5.5 million stoves.

The second period started around 1950 due to the Korean War when households were reminded of World War II and rushed to purchase goods. However, inflation did not jump as high this time.

The third period occurred when a bustling economy with a GDP growth of 4.8 percent caused prices to rise. The rise stopped when president Nixon froze wages and prices.

The fourth instance was due to surging oil prices in the ’70s and continued until 1982. supply shrank because of an oil embargo by the Organization of Arab Petroleum Exporting Countries and a decline in oil production due to the Iran-Iraq war.

The fifth comparable instance was during the Gulf War. The uncertainty led to a short bout of high inflation on crude oil.

The sixth and most recent bout of inflation was in 2008. Gas prices skyrocketed and doubled from the previous year, and CPI rose above 5%. The spike was driven by a surge in demand, financial unease and, again, tensions in the Middle East.

By looking through the history of inflation, it is easy to see some common denominators in these time periods. The three most recent episodes largely involved oil, and more than half – including today’s surge – are due to war.

Despite the similarities, the oil supply issues are not quite the same in every instance.

The United States has become more of a petroleum exporter and uses more renewable energy sources today, becoming more energy independent. The rise seen from 1969-71 is also different. The growth of the economy at the time was relatively higher than present day.

Which leaves the period after World War II as the closest parallel. Even though the wartime inflation caused supply shortages and great demand, there were no price controls.

These controls reduced prices by 30% and, when lifted, made things like food rise 13.8% a month after. There is no perfect scenario from the past that can tell us how and when this bout of inflation will recede. However, the post-World War II period suggests it can quickly decline once supply chains are fully restored and demand levels off.

Our modern case of inflation added new variables

Our recent jump in inflation can be described somewhat as the perfect storm. Many small factors have compounded to create the rise in prices. The United States was still recovering from the ebbs and flows of the COVID-19 pandemic. For instance, when COVID-19 cases fell, restaurants filled. As COVID-19 cases rose, grocery store shelves emptied. These sectors were at the mercy of rapid swings in demand. However, when supply and demand started to even out, the war in Ukraine halted progress again and interjected new supply chain issues.

The supply chain strains from the conflict compounded new transportation problems in the busy economy. Gas and oil restrictions branched off into indirect factors like trade restrictions. These can cause a butterfly effect like in the case of fertilizer. Russia’s suspension of fertilizer exports to the west resulted in farmers having to compensate. To make a profit, farmers have to keep a close eye on production costs. With the rise in demand for fertilizer, they must budget accordingly and thus use less, which reduces yields and quality. Our economic system is multifaceted and a seemingly small change, like not having access to fertilizer, created a huge repercussion for…



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2023-01-20 21:37:00

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US border authorities report increase in egg smuggling attempts as poultry prices soar amid inflation https://newsdaily.business/2023/01/20/us-border-authorities-report-increase-in-egg-smuggling-attempts-as-poultry-prices-soar-amid-inflation/ https://newsdaily.business/2023/01/20/us-border-authorities-report-increase-in-egg-smuggling-attempts-as-poultry-prices-soar-amid-inflation/#respond Fri, 20 Jan 2023 11:44:26 +0000 https://newsdaily.business/2023/01/20/us-border-authorities-report-increase-in-egg-smuggling-attempts-as-poultry-prices-soar-amid-inflation/ Poultry farmers across the country are on edge as the highly pathogenic avian influenza is on the rise in the U.S., with more than 24 states impacted since the start of 2022. Authorities on the border are seeing more seizures of eggs and poultry as people continue to try and bring the much-needed foods into […]]]>


Authorities on the border are seeing more seizures of eggs and poultry as people continue to try and bring the much-needed foods into the United States amid soaring costs. 

U.S. Customs and Border Protection reports a 108% increase in seized egg products and poultry at ports of entry from Oct. 1 to Dec. 31 of last year, according to Border Report, a news outlet that focuses on the southern border. 

“My advice is, don’t bring them over,” CBP Supervisory Agriculture Specialist Charles Payne told the outlet. “If you fail to declare them or try to smuggle them, you face civil penalties.”

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Inflation affecting egg prices

A shopper checks eggs before he purchases at a grocery store in Glenview, Illinois. Border officials are seeing more seizures of eggs amid soaring prices and inflation.  (AP Photo/Nam Y. Huh / AP Newsroom)

In December, egg prices climbed the most in Arizona, Nevada and New Mexico, according to retail data firm Datasembly, which collects real-time data from over 200 retailers across North America including Walmart, Kroger and Target. 

A carton of 12 eggs increased over 64% in all the aforementioned states, according to the retail data firm. That compares to the 18% increase seen in states such as Oregon, California and Washington, according to the data. 

The average cost for a dozen grade A eggs in November was $3.59, according to the Bureau of Labor Statistics. A year ago, the average cost for the same cartoon was $1.72, labor department data shows

Jennifer De La O, the director of field operations for the CBP’s San Diego office, tweeted Monday that officials there have noticed the increase in the seizure of raw eggs. 

“As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000,” she wrote. 

egg prices

Half-empty shelves of eggs are seen at a supermarket on January 8, 2023 in Los Angeles, California.  (I RYU/VCG via Getty Images / Getty Images)

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Border officials typically don’t see eggs being smuggled into the United States compared to other items like cheese or certain fruits and vegetables that have the potential to introduce a foreign disease or be detrimental to U.S. agriculture. In October, CBP officers in El Paso, Texas seized 484 pounds of bologna found inside a pickup truck during an inspection and another 285 pounds of cheese during separate incidents. 

Both suspects failed to declare the products and were assessed a $1,000 penalty each, authorities said. 

Fox Business’ Daniella Genovese contributed to this report. 



Read More:US border authorities report increase in egg smuggling attempts as poultry prices soar amid inflation

2023-01-20 02:12:49

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Japan’s Dec consumer inflation hits fresh 41-year high https://newsdaily.business/2023/01/20/japans-dec-consumer-inflation-hits-fresh-41-year-high/ https://newsdaily.business/2023/01/20/japans-dec-consumer-inflation-hits-fresh-41-year-high/#respond Fri, 20 Jan 2023 11:22:04 +0000 https://newsdaily.business/2023/01/20/japans-dec-consumer-inflation-hits-fresh-41-year-high/ Tokyo Reuters  —  Japan’s core consumer prices in December rose 4.0% from a year earlier, double the central bank’s 2% target and hitting a fresh 41-year high, data showed on Friday, adding to recent growing signs of mounting inflationary pressure. The data will likely keep alive market expectations that the Bank of Japan (BOJ) will […]]]>



Tokyo
Reuters
 — 

Japan’s core consumer prices in December rose 4.0% from a year earlier, double the central bank’s 2% target and hitting a fresh 41-year high, data showed on Friday, adding to recent growing signs of mounting inflationary pressure.

The data will likely keep alive market expectations that the Bank of Japan (BOJ) will soon end its yield control policy and allow interest rates to rise more, analysts say.

The increase in the core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, matched a median market forecast and followed a 3.7% annual gain seen in November.

The annual rise in core CPI thus exceeded the BOJ’s 2% target for a ninth straight month.

“Inflationary pressure is heightening quite a bit, with price hikes broadening beyond those for food and fuel,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Companies aren’t that cautious about raising prices any more. We might see inflation stay above the BOJ’s 2% target well into autumn this year,” he said.

Core-core CPI, which strips away both fresh food and energy costs, was 3.0% higher in December than a year earlier, accelerating from a 2.8% gain seen in November.

The BOJ kept monetary policy ultra-loose on Wednesday but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households.

Many market players expect the central bank to phase out the yield curve control, a policy under which it caps long-term interest rates around zero, when dovish governor Haruhiko Kuroda’s second, five-year term ends in April.



Read More:Japan’s Dec consumer inflation hits fresh 41-year high

2023-01-20 01:40:00

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Exclusive: ECB union says staff losing faith in leadership over inflation, pay https://newsdaily.business/2023/01/18/exclusive-ecb-union-says-staff-losing-faith-in-leadership-over-inflation-pay/ https://newsdaily.business/2023/01/18/exclusive-ecb-union-says-staff-losing-faith-in-leadership-over-inflation-pay/#respond Wed, 18 Jan 2023 11:37:11 +0000 https://newsdaily.business/2023/01/18/exclusive-ecb-union-says-staff-losing-faith-in-leadership-over-inflation-pay/ 40% of ECB staff has low or no trust Two-thirds say confidence is damaged 63% worried about ECB’s ability to protect purchasing power FRANKFURT, Jan 18 (Reuters) – (This Jan. 17 story has been corrected to restore the dropped words in paragraph 11) European Central Bank staff are losing confidence in the institution’s leadership following […]]]>


  • 40% of ECB staff has low or no trust
  • Two-thirds say confidence is damaged
  • 63% worried about ECB’s ability to protect purchasing power

FRANKFURT, Jan 18 (Reuters) – (This Jan. 17 story has been corrected to restore the dropped words in paragraph 11)

European Central Bank staff are losing confidence in the institution’s leadership following the ECB’s failure to control inflation and a pay award that lagged the leap in prices, according to a survey by trade union IPSO.

The responses underline that even central banks, whose primary responsibility is fighting inflation, are not immune to staff dissatisfaction with the sharply rising cost of living.

The survey was organised in the context of a dispute between IPSO, which holds six out of nine seats on the ECB’s staff committee, and the central bank’s board over pay and remote-working arrangements.

An ECB spokesperson did not comment directly on IPSO’s findings when asked but pointed to a separate staff survey, run by the ECB itself last year, showing that 83% of nearly 3,000 respondents were proud to work for the ECB and 72% would recommend it.

Results of IPSO’s survey, which largely focused on pay and remote-working arrangements but also included questions about trust in the board, were sent to ECB staff on Tuesday in an email, seen by Reuters.

They showed two-thirds of roughly 1,600 respondents said their trust in Lagarde and the rest of the six-member ECB board had been damaged by recent developments such as high inflation and a pay increase that did not match the rise in prices.

Asked how much trust they had in Lagarde and the board when it comes to leading and managing the ECB, the central bank for the 20 countries that use the euro, just under half of respondents said “moderate” (34.3%) or “high” (14.6%).

But over 40% of respondents said they had “low” (28.6%) or “no” (12%) trust, while 10.5% could not say.

“This is a serious concern for our institution, as no one can correctly lead an organisation without the trust of its workforce,” the union said in its email.

INFLATION SURGE, PAY BATTLES

The survey was the first by IPSO to ask about trust in top management since Christine Lagarde took over as ECB President in late 2019.

A similar IPSO survey of ECB staff, taken just before her predecessor Mario Draghi stepped down, showed 54.5% of 735 respondents rated his presidency “very good” or “outstanding”, with support for his policy measures even higher.

Then, however, inflation in the euro zone had been low for a decade. Its recent surge to multi-decade highs in countries around the world has seen a revival in battles over pay between workers and the companies and institutions that employ them.

And a majority of respondents in the October 2019 survey also complained about a lack of transparency in recruitment and perceived favouritism under Draghi.

The most recent Bank of England staff survey, also conducted in 2019, showed 64% of respondents had “trust and confidence in the Bank’s leadership”.

A 2022 U.S. government survey of employees at departments and federal agencies found that 61% of respondents had “a high level of respect” for their organisation’s senior leaders – roughly stable compared to the previous two years.

The ECB spokesperson also pointed to internal surveys in 2020-21 that found roughly 80% of respondents were satisfied with health-and-safety measures taken by the ECB in response to the coronavirus pandemic.

The latest IPSO survey showed 63% of staff who responded were worried about the ECB’s ability to protect their purchasing power after being handed a pay increase of just 4% last year – or roughly half the rise in consumer prices.

The ECB has been criticised by politicians, bankers and academics for initially underestimating a surge in the cost of living and then making up for it with large and painful increases in borrowing costs.

Lagarde, who is not an economist and had not been a central banker before joining the ECB, colourfully defended her board at an event with staff last month.

“If it wasn’t for them I’d be a sad, lonely cowgirl lost somewhere in the Pampa of monetary policy,” Lagarde said, according to a recording of the Dec. 19 town hall seen by Reuters.

She and fellow board members have long worried about the risk of a potential “wage-price spiral”, where higher salaries feed into prices, which they argue would make it harder for the ECB to bring inflation back down to its 2% target.

But IPSO said that concern is misplaced and workers should not be made to bear the brunt of the current bout in inflation.

“The ECB might be preaching lower real wages, but this is not our stance as your staff union,” it wrote in its message to ECB employees.

Editing by Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.



Read More:Exclusive: ECB union says staff losing faith in leadership over inflation, pay

2023-01-18 08:29:00

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UK inflation rate dips for second straight month to hit 10.5% https://newsdaily.business/2023/01/18/uk-inflation-rate-dips-for-second-straight-month-to-hit-10-5/ https://newsdaily.business/2023/01/18/uk-inflation-rate-dips-for-second-straight-month-to-hit-10-5/#respond Wed, 18 Jan 2023 11:12:28 +0000 https://newsdaily.business/2023/01/18/uk-inflation-rate-dips-for-second-straight-month-to-hit-10-5/ MichelleMitha | iStock / 360 | Getty Images LONDON — U.K. inflation eased on the month, in line with economists’ expectations, as fuel, clothing and recreational costs dragged down the index. Inflation softened to 10.5% in December, down from the 10.7% of November, the British Office for National Statistics said Wednesday. A panel of economists […]]]>


MichelleMitha | iStock / 360 | Getty Images

LONDON — U.K. inflation eased on the month, in line with economists’ expectations, as fuel, clothing and recreational costs dragged down the index.

Inflation softened to 10.5% in December, down from the 10.7% of November, the British Office for National Statistics said Wednesday. A panel of economists polled by Reuters had projected the British consumer price index would reach 10.5% in December, down from the 41-year-high of 11.1% achieved in October.

The core CPI, which excludes food, energy, alcohol and tobacco, was steady on the month at 6.3% in December, the ONS found.

The agency said the largest downward contribution came from the transport, clothing and recreation sectors, offsetting hikes in housing and household services, food and non-alcoholic beverages.

Inflation rates have spiked across 2022, fueled by surges in energy prices as Western sanctions bite into access to Russian oil and gas supplies. Policymakers have been combatting rising inflation with a spate of interest rate increases, with British premier Rishi Sunak on Jan. 4 pledging to halve U.K. headline inflation to “ease the cost of living and give people financial security.”

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The Bank of England most recently lifted its main interest rate by 0.5 percentage points to 3.5% on Dec. 15. Financial markets anticipate a further rise to 4% when it meets to determine its next monetary policy steps on Feb. 2, according to Reuters.

The U.K. has been rocked by waves of industrial action since the end of last year, with teachers, train transport staff, civil service professionals and nurses set to strike this month and in early February. The government has responded with an anti-strike bill proposal intended to mandate “minimum service regulations.”

Worker pay remains dwarfed by the pace of inflation, with average U.K. wages recording a 6.4% year-on-year increase over the September-November 2022 period, the ONS said on Jan. 17.

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“While there is some indication that inflation may have reached its peak, prices will remain high in the coming months,” warned Helen Dickinson, chief executive of the British Retail Consortium.

“Retailers are determined to support their customers throughout this cost-of-living crisis. They are keeping the price of many essentials affordable, expanding their value ranges, raising pay for their own staff, and offering discounts for vulnerable groups.”



Read More:UK inflation rate dips for second straight month to hit 10.5%

2023-01-18 07:12:52

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