Tag: INFLATION

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Britain facing food shortages, price rises after extreme weather

One major retailer said the wholesale price of potatoes was up 60% year on year as much of the crop had rotted in the ground…reports Asian Lite News

The UK faces food shortages and price rises as extreme weather linked to climate breakdown causes low yields on farms locally and abroad.

Record rainfall has meant farmers in many parts of the UK have been unable to plant crops such as potatoes, wheat and vegetables during the key spring season. Crops that have been planted are of poor quality, with some rotting in the ground.

The persistent wet weather has also meant a high mortality rate for lambs on the UK’s hills, while some dairy cows have been unable to be turned out on to grass, meaning they will produce less milk.

Agricultural groups have said the UK will be more reliant on imports, but similarly wet conditions in European countries such as France and Germany, as well as drought in Morocco, could mean there is less food to import. Economists have warned this could cause food inflation to rise, meaning higher prices at supermarkets.

Tom Bradshaw, the president of the National Farmers’ Union, said markets had “collapsed” as farmers fail to produce food in the punishing conditions. He said: “We’re going to be importing a lot more product this year.”

One major retailer said the wholesale price of potatoes was up 60% year on year as much of the crop had rotted in the ground.

Supplies of potatoes have also been affected by a 10% reduction in the area planted last year as farmers switched to less weather dependent and more financially secure crops. Industry insiders said they expected a further 5% fall in planting this year.

Jack Ward, chief executive of the British Growers Association, said: “There is a concern that we won’t ever have the volumes [of potatoes] we had in the past in the future.”

He said wholesale prices were too low for farmers to generate enough income to cope with high fuel, labour and machinery costs as well as the effects of climate breakdown. “We are not in a good position and it is 100% not sustainable.”

Supplies of carrots and parsnips, which are left in the ground and so also affected by sodden soils, are also much lower than usual, pushing up prices.

Martin Lines, the chief executive of Nature Friendly Farming Network, said: “The impact in the UK this year will significantly affect potatoes and the salad crop. Farmers are already facing delays in planting, with many fields in poor condition. If planting occurs at all, it will likely be late, potentially leading to a shortage of root vegetables and potatoes this coming winter.

“Some farmers have ceased planning for planting altogether, opting instead to put fields into fallow or switch to alternative crops. This could also result in shortages of wheat, barley and pulses as it’s currently unprofitable to grow these due to the lateness of the season and low forecasted prices.”

Guy Singh-Watson, the founder of the organic vegetable box company Riverford, said he had so far planted “virtually no veg”. “Some overgrown plants cannot wait any longer to go in the ground, and will have to be ditched.”

While retailers often turn to imports to fill gaps on shelves, farmers across Europe are enduring a similarly difficult start to the year, with difficulties developing winter crops and sowing spring crops.

Amber Sawyer, an analyst at the Energy and Climate Intelligence Unit, said last year almost a third of the UK’s tomatoes, and more than two-thirds of its raspberries and brussels sprouts, came from Morocco.

“As climate change worsens, the threat to our food supply chains – both at home and overseas – will grow,” Sawyer said.

Scientists have said this is just the beginning of shocks to the food supply chain caused by climate breakdown and that without rapid action to drive down emissions by ceasing to burn fossil fuels, the current system is unsustainable.

UK unemployment soars to six-month high

Britain’s unemployment rate rose unexpectedly to the most in six months as the number of jobs in the economy shrank, an indication of cooling in the once red-hot labor market.

The jobless rate rose to 4.2% in the three months through February after a reading of 3.9% in the previous period, the Office for National Statistics said Tuesday. It was the biggest jump since 2020, when the country was emerging from pandemic lockdowns.

The figures provided a tentative sign that inflationary pressures in the jobs market are cooling. But the report also showed wage growth, which the Bank of England is watching carefully, remained stubbornly high, easing to 6%. That was only slightly down from the 6.1% reading previously and above the expectations of economists.

“Easing pressure in the labor market keeps the Bank on track for a summer rate cut,” said Yael Selfin, chief economist at KPMG UK. “The rise in the unemployment rate paints a picture of a less tight labor market. The exact timing of the first rate cut will be a hot debate.”

The policymakers have been reluctant to signal a shift away from their fight against inflation because of concerns that continued strong pay growth will fuel price rises.

The pound slipped back 0.2% against the dollar to $1.2422 following the release. Traders’ bets on BOE interest-rate cuts were little changed, with the market implying two quarter-point reductions by the end of the year. The first cut is fully priced by September, with an 80% chance of an earlier cut in August.

Reading on the labor market have been clouded with problems in deriving the official data. The ONS for months has urged caution in interpreting its figures on employment, unemployment and inactivity due to a plunge in the number of responses it receives to its surveys.

ALSO READ-Tackling Inflation

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Business Economy India News

Tackling Inflation

The government has been taking various steps to control food inflation which is reflected in the CPI inflation coming down to a 9-month low of 4.85 per cent in March….reports Asian Lite News

As part of its stepped-up vigil to bring down prices of pulses, the Government has warned traders that anyone found indulging in forward trade of pulses would be dealt with firmly in accordance with the provisions of the Essential Commodities Act.

The message has been clearly conveyed to all traders during a series of interactions held by Secretary, Department of Consumer Affairs, Nidhi Khare with representatives of the pulses industry in the run-up to the operationalisation of online stock monitoring from April 15, 2024, according to an official statement issued on Saturday.

At the same time, the Government is also arranging for more imports of pulses from Myanmar to bring down prices in the domestic market through increased availability.

The government has been taking various steps to control food inflation which is reflected in the CPI inflation coming down to a 9-month low of 4.85 per cent in March. However, while the rise in the prices of pulses has slowed, it is still in double-digit figures at 17.7 per cent.

Department of Consumer Affairs has obtained feedback from the industry and inputs from market intelligence relating to pulses and the stock position with various market players have been collated for further verification.

Nidhi Khare also discussed with the Indian Mission in Yangon on issues relating to pulses imports from Myanmar such as import prices in the wake of revised exchange rates and stocks held by importers in Myanmar. The Indian Mission apprised that the Rupee Kyat Settlement Mechanism has been operationalised from January 25, 2024, to simplify trade transactions and to make them more efficient.

The Central Bank of Myanmar released guidelines for payment procedures under the Special Rupee Vostro Account (SRVA) on January 26, 2024. The new mechanism will apply for both sea and border trade and for trade in goods as well as services. Adoption of the mechanism by traders will reduce costs associated with currency conversions and eliminate complexities related to exchange rates by eliminating the need for multiple currency conversations.

Dissemination about the operationalisation of this mechanism among trading communities, especially importers of pulses, is being separately done wherein they are being requested to utilise the Rupee/Kyat direct payment system using SRVA through the Punjab National Bank, the statement said.

The importers and other industry players like millers, stockists, retailers etc have been asked to honestly declare their stock of pulses, including imported Yellow Peas, on a weekly basis on the portal https://fcainfoweb.nic.in/psp/ from April 15.

The States and UTs have also been asked to enforce weekly stock disclosure by all stockholding entities and verify the stocks declared by them. Stocks in warehouses located in major ports and in pulses industry hubs should be verified from time to time and strict action should be taken on stockholding entities found to be reporting false information on the stock disclosure portal.

Retail Inflation Dips to 4.85%

India’s consumer price inflation eased to a 9-month low of 4.85 per cent in March bringing relief to household budgets, figures released by the Ministry of Statistics on Friday showed.

Retail Inflation has come down closer to the RBI’s mid-term target of 4 per cent after which the central bank would be in a position to cut key interest rates to spur economic growth.

The country’s CPI inflation had stood at 5.09 per cent in February and 5.1 per cent in January.

The declining trend in cooking oil prices continued in March with a 11.72 per cent fall during the month. The price rise in spices slowed to 11.4 per cent in March from 13.28 per cent in February.

The inflation in pulses also slowed to 17.71 per cent during the month compared to 20.47 per cent in January.

However, the data shows that vegetable prices shot up by as much as 28.34 per cent in March which remains a pain point for consumers. The prices of cereals also increased by 8.37 per cent during the month.

The consumer price inflation is still above the RBI’s mid-term target of 4 per cent and is the main reason why the central bank has not gone in for a cut in interest rates to rev up growth.

The RBI is keen to keep inflation under control to ensure stability and has held the repo rate steady at 6.5 per cent for seven consecutive times in a row in its bi-monthly monetary policy reviews.

The RBI stated in its monetary policy review on April 5 that it expects inflation to come down to 4.5 per cent in 2024-25, assuming a normal monsoon this year.

Going forward, the inflation trajectory will be shaped by the evolving food inflation outlook. Rabi sowing has surpassed last year’s level. The usual seasonal correction in vegetable prices is continuing, though unevenly, the RBI said.

ALSO READ: PM Modi Turns Gamer ‘NaMo OP’

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Will Hunt Spring A Surprise?

Jeremy Hunt will use his final budget before the election to promise voters lower tax and higher growth, with the chancellor set to announce a 2p cut to national insurance…reports Asian Lite News

Jeremy Hunt will use his final budget before the election to promise voters lower tax and higher growth, with the chancellor set to announce a 2p cut to national insurance, even at the expense of public services.

Sources said Hunt had decided to reduce national insurance for the second time in less than six months, having defied calls from some in Downing Street and across the party for a more expensive pre-election income tax cut.

The chancellor will frame the move as a push for growth, opportunity and prosperity, having brushed off concerns among many Tories that cutting national insurance would not be enough to overturn the party’s 20-point deficit to Labour in the polls.

But he is likely to impose strict spending limits to come in after the election to help pay for the tax cuts, causing some in his party to worry that voters will punish them for cutting services rather than rewarding them for lowering taxes.

Hunt will say: “Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity. But if we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration. It can only come by building a high-wage, high-skill economy. Not just higher GDP, but higher GDP per head.”

In a message designed to bolster the pre-election message that a Labour government would take the country backwards, Hunt will add: “Instead of going back to square one, our plans mean more investment, more jobs, more productive public services and lower taxes.”

However, Labour will attempt to focus the debate on declining living standards. Rachel Reeves, the shadow chancellor, said: “The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down.”

In his post-budget response, the Labour leader, Keir Starmer, will say taxes will rise for most families even after the budget, given that thresholds for national insurance and income tax continue to be frozen in cash terms.

An analysis by the Resolution Foundation thinktank on Tuesday showed that only those paid between £27,000 and £59,000 a year would be better off as a result of both the autumn statement and Wednesday’s budget. Those paid £16,000 would lose almost £500 a year, as would those receiving more than £60,000.

Hunt and Rishi Sunak have spent the last few weeks trying to find enough money for a tax cut on the scale of last November’s autumn statement, when the chancellor reduced national insurance from 12% to 10%.

The chancellor has been hampered by forecasts from the Office for Budget Responsibility that showed he had less money than he had hoped to be able to spend without breaking his promise to have debt beginning to fall in five years’ time.

Hunt is preparing however to announce a series of targeted tax rises to help pay for the national insurance cut. They include limiting tax breaks to non-doms, introducing a levy on vaping products, increasing taxes on short-term holiday lets, extending the energy windfall tax and increasing taxes on business-class flights. Together these measures are expected to raise about £5bn a year.

More controversially, Hunt is preparing to defy economists’ warnings of an impending public services crunch and reduce his forecasts for departmental spending after the election.

The plans he set out in November assumed departmental budgets would rise 1% above inflation each year after the election, all of which would be soaked up by protected departments such as health and defence. However, the chancellor is set to reduce that figure to just 0.75%, meaning unprotected areas such as justice and local government would face cuts of up to 20% over the course of the parliament.

The plans have sparked concern among some in the Tory party, who point to a series of polls showing that voters would prefer higher public spending and higher taxes than the promise of immediate tax cuts.

“The tax cuts are going to require even more unrealistic public service cuts post-election,” said one Tory insider. “There is already a big argument about whether the public will react more badly to that than they do positively to the tax cuts themselves.”

Hunt decided to reduce national insurance despite some in No 10 pushing for a cut to income tax instead, which they argued would be more easily understood by voters. Since announcing November’s national insurance move, the Conservatives have fallen one point further behind Labour in the polls.

One Tory MP said: “It didn’t work last time round, what makes them think it will be any different this time?”

But the chancellor argued that focusing on national insurance would be less inflationary, and unlike income tax would apply to the whole of the UK.

Many Tory MPs also expect the prime minister to promise further tax cuts in the election manifesto, including as large as 4p from income tax.

“It would create a clear dividing line with Labour,” said one. “There’s no way that they could match that.”

Hunt is also preparing to make other tax cuts on Wednesday, including another freeze in fuel duty.

Sources have said he is also likely to continue the freeze in alcohol duty that he announced last year but is set to run out this August.

Sunak will visit two pubs in different parts of the country this week, sparking speculation among industry sources that the chancellor could go even further and announce a temporary cut in VAT and business rates for the hospitality industry. Pubs, restaurants and hotels have been campaigning heavily for such a move given that so many hospitality businesses have closed in recent years as a result of spiralling costs.

ALSO READ-Labour seeks deeper UK-India cooperation  

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Political instability aggravates Pakistan’s economy crisis

Pakistan is likely to miss the bailout package by the International Monetary Fund (IMF) that is required to protect the cash-strapped country from default….writes Dr Sakariya Kareem

Pakistan stares at a bigger economic crisis as the aggrieved political instability after the inconclusive election results has thrown the country into chaos and hopelessness.

The government formed through a coalition of dissonant political parties will lead to policy paralysis, obstructing crucial economic reforms. All this would be detrimental to the country’s economy, which is already suffering from an array of problems such as hyperinflation, unsustainable external debts, and low levels of foreign reserves. 

Pakistan’s debt profile raises an alarm thanks to unsustainable borrowing and spending patterns. The debt per capita has increased by 36 percent between 2011 and 2023 while the GDP per capita decreased by 6 percent during the same period. 

Pakistani Currency.

The widening financing gap has necessitated further borrowing. Against such a backdrop, the ongoing political instability, which may affect the external financing flows, is going to hurt Pakistan’s economic trajectory in the longer term, cautioned Fitch Ratings, a global credit agency.

This means Pakistan is likely to miss the bailout package by the International Monetary Fund (IMF) that is required to protect the cash-strapped country from default. “Continued political instability could prolong any discussions with the IMF, delay assistance from other multilateral and bilateral partners, or hamper the implementation of reforms,” Fitch Ratings noted.

Pakistan People’s Party (PPP) has announced conditional support to the Pakistan Muslim League-Nawaz (PML-N) to form a new government. However, the rival Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) too is trying to come to power by allying with a few smaller parties. 

Now Pakistan faces high tensions and a political slugfest, the first victim seems to be its economy.

Pakistan had protected itself from a default last year thanks to a USD 3-billion bailout from the IMF. However, it needs to renew the IMF support by March, which seems challenging amid political instability.

Amreen Soorani, head of research at Karachi-based JS Capital, said “Lack of clarity has always been a killer for the market as it leaves existing and prospective investors indecisive on outlook.”  Pakistan is set to see more instability in the near future.         

Islamabad-based think tank Tabadlab called Pakistan’s borrowing and spending habits “unsustainable” as Pakistan USD 49.5 billion in debt maturities in 2024 and its economy’s ability to grow or increase output is constrained. “This is unsustainable. Unless there are sweeping reforms and dramatic changes to the status quo, Pakistan will continue to sink deeper, headed towards an inevitable default, which would be the start of the spiral” reads the latest report by the think tank. 

Pakistan Army is often blamed for dominating national decisions, interfering the civilian government affairs, and even influencing electoral results.  This time however people of Pakistan have defied the army, said Hina Jilani, Chairperson of the Human Rights Commission of Pakistan.  “Things are still very fluid post-election, and that in itself shows how this period is not going to be a very stable one,” she said.  The current political situation does not favour any hope or stability for Pakistan, Jilani added.

People buy peanuts at a shop in northwest Pakistan’s Peshawar on Dec. 9, 2020. (Photo by Umar Qayyum/Xinhua/IANS)

Syed Munir Khasru, chairman of the international think tank IPAG Asia-Pacific, said the next prime minister of Pakistan will have to walk on a tightrope as the government could collapse while making hard decisions for economic recovery. “The next prime minister will have to accommodate the demands of coalition partners while confronting economic crises,” he said.

If Pakistan seeks to get another IMF bailout, it will have to implement more austerity measures, which will translate into reducing subsidies on essential commodities. “Imposing draconian economic measures on an already struggling population will not be easy… We can expect serious social unrest down the road,” said Claude Rakisits, a visiting research fellow at the Brussels-based Centre for Security, Defence and Strategy. 

Around 40 percent of people in Pakistan live below the poverty line.  The IMF conditions are hard to meet as Pakistan has been witnessing unbearable inflation, which hovered around 30 percent in the past year. The elections in Pakistan were supposed to bring stability to the country. However, the inconclusive election results have rather added to the political instability, which can harm Pakistan’s economy in the long term.

ALSO READ: SPECIAL: Minority Rights and Electoral Dynamics in Pakistan

ALSO READ: Is Pakistan Nearing an Inevitable Debt Default?

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UK shop price inflation drops sharply

Despite increasing from 3.9 per cent in November, December’s inflation rate was still well below the multi-decade high of 11.1 per cent reached in October 2022…reports Asian Lite News

UK shop price inflation eased sharply in January to its lowest rate in almost two years as retailers heavily discounted goods during a weak sales period, industry data showed.

The British Retail Consortium said on Tuesday annual shop price inflation slowed to 2.9 per cent in January, down from 4.3 per cent in December. It is the seventh consecutive monthly decline and the lowest rate since May 2022.

Separate data also released on Tuesday by the research company Kantar showed grocery inflation declined more slowly to 6.8 per cent in January, from 6.9 per cent in the previous month.

The BRC index includes all retailers, while Kantar tracks supermarkets. The BRC said non-food prices were the primary drivers of the decline in January, and recorded a figure for food inflation of 6.1 per cent in January, down from 6.7 per cent in the previous month.

Both indices provide early indications of pricing pressures ahead of the publication of official data on February 14, and raise some hopes that underlying inflationary pressures are continuing to ease despite the uptick in the headline measure to 4 per cent in December.

The drop in shop inflation resulted from retailers offering “heavily discounted goods in their January sales to entice consumer spend amidst weak demand”, said BRC chief executive Helen Dickinson.

Despite increasing from 3.9 per cent in November, December’s inflation rate was still well below the multi-decade high of 11.1 per cent reached in October 2022.

Markets have been pricing in that the Bank of England will hold the benchmark interest rate at its 15-year high of 5.25 per cent on Thursday, but will start cutting rates in June as inflation is expected to slow towards the central bank’s 2 per cent target.

Dickinson noted that the price of milk and tea also fell in January compared with the previous month, while increased alcohol duties kept the cost of drinks elevated.

Non-food prices fell 1.4 per cent month on month, driving an overall annual decline across all categories, the BRC said. Annual non-food inflation slowed to 1.3 per cent in January, from 3.1 per cent the previous month, marking the lowest rate since February 2022.

Mike Watkins, head of retailer and business insight at NielsenIQ, who helped to compile the data, said: “Shoppers are seeing savings at the checkout with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall.”

ALSO READ-UK population to hit 70 mn by mid-2026

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India’s Stock Market Surpasses Hong Kong in Global Ranking

GDP.

The past 12 months have been stellar for investors who parked their money in Indian stocks. Though there has been some turbulence, the calendar year 2023 gave handsome monetary dividends to stock market investors…reports Asian Lite News

Firm GDP growth forecasts, inflation at manageable levels, political stability at the central government level and signs that the central bank is done with tightening its monetary policy have all contributed to painting a bright picture for the Indian stock market.

India pipped Hong Kong to become the fourth-highest equity market globally, Bloomberg reported. The combined value of shares listed on Indian exchanges reached USD 4.33 trillion as of Monday’s close, versus USD 4.29 trillion for Hong Kong, according to data compiled by Bloomberg. India’s stock market capitalization crossed USD 4 trillion for the first time on December 5, 2023, with about half of that reportedly coming in the past four years. The top three stock markets are those of US, China, and Japan.

Cumulatively, the past 12 months have been stellar for investors who parked their money in Indian stocks. Though there has been some turbulence, the calendar year 2023 gave handsome monetary dividends to stock market investors. In 2023 itself, Sensex and Nifty gained 17-18 per cent, on a cumulative basis. They gained a mere three to four per cent each in 2022. Hong Kong’s benchmark Hang Seng Index cumulatively declined 32-33 per cent over the past year, data showed.
Notably, foreign portfolio investors have again trained their sight towards India, becoming net buyers in the country’s stock market. In the process, it helped Indian benchmark stock indices taste their all-time highs recently.

According to the Bloomberg news report, India, which last year became the most populous country has positioned itself as an alternative to China, attracting fresh capital from global investors and companies alike, due to its stable political setup and a consumption-driven economy that remains among the fastest-growing of major nations.
As Indian stocks rallied, it coincided with a historic slump in Hong Kong, where some of China’s most influential and innovative firms are listed.

According to the news report, stringent anti-COVID-19 curbs, regulatory crackdowns on corporations, a property-sector crisis and geopolitical tensions with the West have all combined to erode China’s appeal as the world’s growth engine. New listings have dried up in Hong Kong, with the Asian financial hub losing its status as one of the world’s busiest venues for initial public offerings (IPOs). Here are some of the views of analysts and experts on India surpassing Hong Kong stock market in capitalisation terms: Sneha Poddar, AVP, retail research, Broking and Distribution, Motilal Oswal Financial Services:
India remains the fastest-growing country among the top 10 global economies.

The strong post-pandemic recovery and resilient performance amid global headwinds demonstrate the inherent strength of the economy. Strong growth, prudent policy reforms, government’s focus on infrastructure and capex, healthy corporate books, comfortable forex reserves, and lower commodity cost inflation could protect India from any external shocks and position it to outpace other countries in the coming decade.

Thus, we remain firm believers in the medium term India story and expect the overall trend to strengthen with multiple themes at play – financialization of savings, private capex revival, rising discretionary consumption, strengthening of real estate cycle, and the massive creation of digital and physical infrastructure. That being said, we believe the journey will not be linear and will be combined with regular bouts of volatility as valuations are full. Palka Arora Chopra, Director, Master Capital Services:

A rapidly expanding retail investor base, consistent inflows from foreign institutional investors (FII), robust corporate profitability, and bullish investor sentiments drove Indian equities to new highs. Investor confidence has increased due to the anticipated rate reduction by international central banks in 2024, which has further fuelled the surge in the Indian market.

The positive macroeconomic conditions, predictions of interest rate decreases, and optimistic attitude before the election, have helped the Indian equities markets see gains for eight years running and are expected to continue growing.

India has positioned itself as an alternative to China, attracting fresh capital from global investors and companies alike. The economic slowdown in China and the pressure on American investors to reduce their exposure to Chinese companies are causing the Hong Kong markets to decline. Sunil Nyati, Managing Director, Swastika Investmart:

A stark contrast has emerged between the Indian and Hong Kong markets in recent years. This can be attributed to several converging factors. Firstly, India’s economic resurgence has propelled it to the top of the global growth charts, while China and Hong Kong grapple with slowing momentum.

Political and policy stability, coupled with improved corporate governance practices, further bolster India’s appeal. Conversely, China and Hong Kong face investor anxieties due to policy uncertainties. Consequently, foreign institutional investors (FIIs) are increasingly shifting their focus towards India, seeking refuge from the turbulence in the Chinese and Hong Kong markets. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services:

A significant trend in global economic growth now is the underperformance of China and the outperformance of India. This is getting reflected in the stock market. Since the important Chinese stocks listed in Hong Kong have crashed, the Hang Seng index is near 19-year low. This trend is likely to continue since the prospects for the Chinese economy and stock market appear bleak for now.

However, if the Chinese economy stages a comeback the Chinese stocks will bounce back since their valuations are very low. Nirav Vakharia, a Delhi-based analyst: Economic reforms taken up over the past decade since 2014, production-linked incentives to put thrust on manufacturing sector, has helped Indian stock market.” The journey is long; this is just a phase. The US and Chinese markets are more open, and ours is a bit tightly controlled. It is not yet fully open as it should have been. I expect this will gradually happen in the coming 10-15 years, with reforms at macro levels.

Dhirendra Kumar, CEO of Value Research: India’s steady rise in the economy and it becoming an island of growth when other countries are struggling to grow or seeing a nominal rise is a positive. China’s relative decline over the past 3-4 years since the Covid has hurt Hong Kong, as several Chinese companies are listed in Hong Kong. The Hong Kong stock market has various Chinese companies listed on it, and we have seen that they have steadily declined and are going out of prominence. While the Indian market is gaining prominence, backed by foreign portfolio investors’ investments, domestic investors are also steadily trying to mark it up.

India now has huge potential…Once the purchasing power of Indians improves further, they will save more and invest more in the market. (ANI)

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Inflation rate surprises with rise to 4% in UK

Financial markets and traders are still expecting it to cut its base rate in 2024 due to the inflation rate falling sharply since peaking at 11.1% in October 2022, which was the highest rate in 40 years…reports Asian Lite News

Expectations that interest rates will be cut this year remain despite a surprise uptick in the UK’s inflation rate last month.

Inflation, which measures how prices rise over time, rose marginally to 4% in December, up from 3.9% in November. Economists had forecast a slight fall, but rises in tobacco and alcohol prices were behind the surprise rise.

But with energy bills predicted to come down in 2024, there are expectations of rate cuts later this year. Spikes in the cost of gas and electricity and food costs, started by Covid lockdowns ending across the world and fuelled further by Russia’s invasion of Ukraine, have put household finances under pressure in recent times.

The Bank of England raised rates in a bid to tackle the pace of price rises in the UK, which has strained the finances of households. The Bank’s rate currently stands at 5.25%, a 15-year high,which has led to higher mortgage rates due to the cost of borrowing money being more expensive. Returns on savings, however, have also gone up.

Financial markets and traders are still expecting it to cut its base rate in 2024 due to the inflation rate falling sharply since peaking at 11.1% in October 2022, which was the highest rate in 40 years.

Inflation has also fallen quicker than the Bank had predicted, but it still remains nearly double its 2% target. But on Wednesday, the markets shifted in their predictions on how much rates would be cut by.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, suggested that the five cuts priced in by investors before the latest inflation figures to bring rates down to 4% this year looked a “stretch”. But he added that energy prices falling further would drive down overall inflation, which he said should give the Bank “confidence” to cut its rate for the first time in May, “or failing that in June.

Ruth Gregory, deputy chief UK economist at Capital Economics, said she expected inflation to fall below the Bank’s 2% target in April, which would leave policymakers “in a position to cut interest rates by June”.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said while the “trend is likely to be downwards” on interest rates, “there are likely to be more knocks on the way, with conflict in the Red Sea raising the risk of supply shortages, which could feed into higher prices”.

Several shipping companies have stopped vessels using the Red Sea – one of the world’s busiest shipping lanes – after attacks by Houthi rebels in Yemen.

Container vessels carrying all sorts of goods and fuel, mainly from Asia to Europe are having to divert around the southern tip of Africa, adding about 10 days onto journeys, which has prompted warnings that consumer prices could rise and drive up inflation again.

“There’s the risk this could end up throwing a real spanner in the works,” added Ms Coles, pointing out that December’s surprise rise in inflation “demonstrates that the path is going to be bumpy”.

Ahead of speculation of the Bank cutting interest rates, mortgage lenders have been announcing reductions in borrowing costs. On Wednesday, Coventry Building Society and Santander announced cuts as competition among lenders continues.

The ONS said tobacco and alcohol prices were up 12.9% in December compared to the month before, with the former rising due to recent tax hikes on the product.

ALSO READ-UK Inflation Eases to 3.9% in November

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How Google Trends Reflects Concerns on Inflation

Based on Google Trends data, the study concludes that inflation anxiety has been easing over 2023, but remains higher than during 2018-2021….reports Asian Lite News

Google search interest regarding the prices of just three vegetables — tomatoes, onions, and potatoes (TOP) — has turned out to be a useful indicator of price anxiety in India, according to an ICRA study released on Tuesday.

The study, titled ‘Quickonomics’, uses Google Trends data on TOP price searches as a proxy for price anxiety and observes how they are increasingly useful in gauging inflationary expectations — a key factor in monetary policy making.

Especially, since these food prices have kept the headline inflation under pressure in India and are also instrumental in keeping inflation volatility high, the report states.

Based on Google Trends data, the study concludes that inflation anxiety has been easing over 2023, but remains higher than during 2018-2021.

Within TOP, onions and tomatoes show a super spike in Google search interest every few years. Search interest in potato prices is comparatively range-bound and devoid of super spikes, as per the trends data for the past five years

According to the study, fewer losses from potatoes, because of better storage, have kept prices and search anxiety on their prices range-bound. Tomatoes and onions lack adequate storage and face higher losses in comparison

“We find that the Google Trends index based on searches for ‘inflation’ is strongly correlated with inflation expectations of households based on the Reserve Bank of India’s (RBI) survey, and hence, a good proxy for inflation anxiety in the economy,” the study states.

Inflationary pressures in the Indian economy may be tracked in three ways.

First, is by looking at the actual data. CPI inflation is released by the National Statistical Office (NSO) and the daily retail price data is released by the Ministry of Consumer Affairs.

Second, is the data on inflation expectations of households based on surveys, conducted by the RBI.

The study finds Google Trends as a third interesting source. “We take this as a proxy for inflation anxiety, based on Google web search requests by consumers for prices of commodities key to their consumption and those they believe are witnessing an upturn in prices,” the ICRA report states.

November CPI inflation made headlines again, as it rose to 5.6 per cent from 4.9 per cent in October. Food inflation jumped to 8.7 per cent from 6.6 per cent, with vegetables inflation soaring 17.7 per cent, followed by pulses. This is the second price shock in vegetables in the current fiscal.

Uncertainty on food prices is, thus, likely to haunt the Monetary Policy Committee (MPC) again. While there is little that the MPC can do to control food inflation, persistent food inflation can become generalised and enter headline inflation, requiring a monetary policy response. Hence, there is a need to closely watch food prices, the ICRA report says.

“We find that the Google Trends index based on searches for ‘inflation’ is strongly correlated with inflation expectations of households based on the RBI’s survey, and hence, a good proxy for inflation anxiety in the economy,” the ICRA report concluded.

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Grocery price inflation falls at fastest rate on record

The average household spent £28 more on groceries across the month than in December 2022, with families spending an all-time high of £477 on groceries over Christmas…reports Asian Lite News

Supermarket inflation slowed down at the fastest rate ever recorded in December, according to data firm Kantar.

Annual grocery price inflation in December eased from 9.1% to 6.7% compared with the previous month. Making December’s figure the sharpest monthly slowdown ever recorded.

Prices for sweets, eggs, frozen potato products are still rising the fastest, but the cost of butter, milk and cream all fell.

The average household spent £28 more on groceries across the month than in December 2022, with families spending an all-time high of £477 on groceries over Christmas.

Britons made 488 million trips to the supermarkets over the four weeks to December 24, some 12 million more than the year before – and sent a record £13.7bn through the tills.

December 22nd was the most popular shopping day, when just over 25 million trips were made and consumers spent £803m in physical stores.

The discount chains Aldi and Lidl hit their highest ever market shares for the festive period while Britain’s two biggest supermarkets, Tesco and Sainsbury’s, were also among Christmas winners.

Supermarkets saw especially strong performances for their own-label lines, with sales of premium ranges like Sainsbury’s Taste the Difference and Tesco Finest surging by 11.9% compared with last year to hit £790m, accounting for 5.7% of all grocery sales.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “The rate of inflation is coming down at the fastest pace we have ever recorded, but consumers are still facing pretty hefty pressures on their budgets. “Retailers were clearly working hard during the festive period to offer best value and win over shoppers, and promotions were central to their strategy.

Tesco, Sainsbury’s, Asda, Morrisons and Waitrose accounted for a combined market share of 70% over the quarter to December 24th. The traditional Christmas dinner held up well in sales terms. Parsnips, sprouts and potatoes were sold 12%, 9% and 8% respectively more in December 2023 than in 2022.

Sales of chilled gravy were up by 11% and meat items like pigs in blankets, sausages, hams and turkeys were up by 6% collectively. But mince pies and Christmas puddings dropped in popularity, with sales volumes falling by 4% and 7% respectively.

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UK Inflation Eases to 3.9% in November

On a monthly basis, CPI fell by 0.2 per cent in November 2023, compared with a rise of 0.4 per cent in November 2022, said ONS…reports Asian Lite News

 The UK’s Consumer Prices Index (CPI) rose by 3.9 per cent in the 12 months to November 2023, down from 4.6 per cent in October, official data showed on Wednesday.

This is the lowest inflation rate in more than two years, according to the Office for National Statistics (ONS), but still about double the 2 per cent target set by the central bank, reports Xinhua news agency.

On a monthly basis, CPI fell by 0.2 per cent in November 2023, compared with a rise of 0.4 per cent in November 2022, said ONS.

“The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year,” said Grant Fitzner, chief economist of the ONS.

Data showed overall motor fuel prices fell by 10.6 per cent in the year to November 2023.

“Food prices also pulled down inflation, as they rose much more slowly than this time last year. There was also a price drop for a range of household goods and the cost of second-hand cars,” Fitzner said.

The annual inflation rate of food and non-alcoholic beverages was 9.2 per cent in November, easing for the eighth consecutive month from a 45-year high of 19.2 per cent in March 2023.

The ONS said the November 2023 rate is the lowest since May 2022.

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