Mon. Jan 24th, 2022

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It was another milestone day for inflation news. Figures published today show that US prices have risen against them fastest rate in almost 40 years in December, which fueled the Federal Reserve’s fears that inflation was not temporary.

The data, which shows that US inflation has reached 7 percent, the largest year-on-year increase since June 1982. It came a day after Fed Chairman Jay Powell warned that such increases in the cost of living, if it is sustained, a “serious threat” to job creation in the US.

The US is not alone. Inflation in rich countries has risen to a 25-year high. The annual rate of consumer price growth in the OECD group of developed countries reached 5.8 percent in November, according to data released yesterday, from just 1.2 percent in the same month last year and the highest rate since May 1996.

We also gained insight today into the impact of inflation on companies. The British budget hotel operator Whitbread predicted that inflation in the hospitality sector would average between 7 and 8 percent and warned that rising energy and wage costs would mean higher room rates for its guests this year.

Wage costs are rising in part because the pandemic has increased the power of workers in the service sector to demand higher pay – and that includes workers in the economy. The challenge for gig business models was caught up in this FT interview with Niklas Östberg, CEO of the German food delivery application Delivery Hero, acknowledging that he will either have to get people to accept higher prices or service levels will suffer.

The problems caused by inflation are not just about calming price rises. In the UK, there is disagreement about how to measure it, such as this piece by Paul Lewis, BBC Radio 4’s Money Box presenter.

Latest news

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Must know: the economy

China is hitting the brakes on its African lending. It matters because Chinese banks now makes up about one fifth of all loans to Africa, concentrated in a few strategic or resource-rich countries including Angola, Djibouti, Ethiopia, Kenya and Zambia.

Graph showing that China has become a major player in international development finance.  Development Aid and Other Official Flows, 2000-2017 ($ billion in 2017 $ terms)

The more cautious approach comes amid warnings that several African countries may struggle to repay debt. Some nations have reached the limit of their borrowing capacity and the prospect of default threatens.

Latest for UK / Europe

A senior official of the World Health Organization warned this yesterday more than half of the European population can be infected with Omicron within the next two months. Hans Kluge, the WHO’s regional director for Europe, said “due to the unprecedented scale of transfer” Europe is now seeing rising rates of hospitalization.

There was better news for the UK with Covid-19 hospital admissions among adults in England begin to fall, according to official NHS data, which raises hopes that the health service has endured the wave of Omicron variant infections.

Worldwide latest

Tighter US monetary policy is likely to exacerbate an already difficult outlook for emerging and developing economies, according to the World Bank’s prospects for the global economy.

Line chart of change in output of pre-pandemic trends,% showing As the rich world recovers, poor countries lag behind

Larger and more persistent scars are likely to remain as developing countries face a perfect storm of events, this piece explained by Chris Giles.

Must know: business

The largest US businesses are set to deliver buffer results in the upcoming reporting season with companies in the S&P 500 stock index forecast to deliver year-on-year earnings growth of nearly 22 percent for the last three months of 2021, according to Wall Street estimates compiled by data provider FactSet . However, the future looks less bright with analysts worried about high inflation, supply chain problems and the continued spread of the Omicron variant that will undermine performance in 2022.

Property still has a good run despite the start of Omicron. Savills significantly upgraded its profit forecasts today after the British real estate agent enjoyed a rush to buy expensive homes and warehouses late last year.

There was also good news from a group of UK retailers today, upgrading their earnings forecasts following better-than-expected Christmas trading. Further details can be found here.

A stalwart of the British main street, Boots, can be bought by private equity with revelations that the buyout groups are Bain and CVC the preparation of a joint bid for the pharmacy chain.

One industry that flourished during the pandemic was the manufacture of Covid test kits. Most of us might be happy to see the back of them. But FT columnist Brooke Masters feel a longer term opportunity as test manufacturers can convince patients, insurers and governments that it is worth paying for routine screening for all types of diseases.

The World of Work

Businesses across the US are temporarily close or to adjust working hours as the number of Americans infected with Covid reach an everyday peak, which underscores how disruptions linked to the Omicron variant have washed through the economy.

FT’s contributing editor Michael Skapinker tackles the manage complaint that no one in their team thinks of thanking them, and note that bosses will do well to remember that they are there to solve the problems of their employees, not the other way around. Read his advice in full here.

Covid cases and vaccinations

Total global cases: 309.2m

Get the latest global picture with us vaccine tracker

And finally …

Do you need a break from work, whether at home or the office? In this escapist piece from Life and Arts, FT correspondents in Milan, New York, Hong Kong, London and elsewhere share their favorite places around the places where they live.

‘My place of peace’: Martin Wolf recommends Dulwich Park, one of South London’s most beautiful green spaces © Kayode Fashola / iStock / Getty Images

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