US inflation jumped 8.5 percent in past year, highest since 1981

US inflation jumped 8.5 percent in past year, highest since 1981
Prices have been driven up by bottlenecked supply chains, robust consumer demand and disruptions to global food and energy markets
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Updated 12 April 2022

US inflation jumped 8.5 percent in past year, highest since 1981

US inflation jumped 8.5 percent in past year, highest since 1981
  • Inflation, which had been largely under control for four decades, began to accelerate last spring as the US and global economies rebounded with unexpected speed and strength from the brief but devastating coronavirus recession

WASHINGTON: Inflation soared over the past year at its fastest pace in more than 40 years, with costs for food, gasoline, housing and other necessities squeezing American consumers and wiping out the pay raises that many people have received.


The Labor Department said Tuesday that its consumer price index jumped 8.5 percent in March from 12 months earlier — the biggest year-over-year increase since December 1981.

Prices have been driven up by bottlenecked supply chains, robust consumer demand and disruptions to global food and energy markets worsened by Russia’s war against Ukraine.


The government’s report also showed that inflation rose 1.2 percent from February to March, up from a 0.8 percent increase from January to February.


The March inflation numbers were the first to capture the full surge in gasoline prices that followed Russia’s invasion of Ukraine on Feb. 24. Moscow’s brutal attacks have triggered far-reaching Western sanctions against the Russian economy and have disrupted global food and energy markets.

According to AAA, the average price of a gallon of gasoline — $4.10 — is up 43 percent from a year ago, though it has fallen back in the past couple of weeks.


The escalation of energy prices has led to higher transportation costs for the shipment of goods and components across the economy, which, in turn, has contributed to higher prices for consumers.


The latest evidence of accelerating prices will solidify expectations that the Federal Reserve will raise interest rates aggressively in the coming months to try to slow borrowing and spending and tame inflation.

The financial markets now foresee much steeper rate hikes this year than Fed officials had signaled as recently as last month.


Even before Russia’s war further spurred price increases, robust consumer spending, steady pay raises and chronic supply shortages had sent US consumer inflation to its highest level in four decades.

In addition, housing costs, which make up about a third of the consumer price index, have escalated, a trend that seems unlikely to reverse anytime soon.


Economists point out that as the economy has emerged from the depths of the pandemic, consumers have been gradually broadening their spending beyond goods to include more services.

A result is that high inflation, which at first had reflected mainly a shortage of goods — from cars and furniture to electronics and sports equipment — has been emerging in services, too, like travel, health care and entertainment.


The expected fast pace of the Fed’s rate increases will make loans sharply more expensive for consumers and businesses.

Mortgage rates, in particular, though not directly influenced by the Fed, have rocketed higher in recent weeks, making home buying more expensive.

Many economists say they worry that the Fed has waited too long to begin raising rates and might end up acting so aggressively as to trigger a recession.


For now, the economy as a whole remains solid, with unemployment near 50-year lows and job openings near record highs.

Still, rocketing inflation, with its impact on Americans’ daily lives, is posing a political threat to President Joe Biden and his Democratic allies as they seek to keep control of Congress in November’s midterm elections.


Economists generally express doubt that even the sharp rate hikes that are expected from the Fed will manage to reduce inflation anywhere near the central bank’s 2 percent annual target by the end of this year.

Tilley, Wilmington Trust economist, said he expects year-over-year consumer inflation to still be 4.5 percent by the end of 2020. Before Russia’s invasion of Ukraine, he had forecast a much lower 3 percent rate.


Inflation, which had been largely under control for four decades, began to accelerate last spring as the US and global economies rebounded with unexpected speed and strength from the brief but devastating coronavirus recession that began in the spring of 2020.


The recovery, fueled by huge infusions of government spending and super-low interest rates, caught businesses by surprise, forcing them to scramble to meet surging customer demand.

Factories, ports and freight yards struggled to keep up, leading to chronic shipping delays and price spikes.


Critics also blame, in part, the Biden administration’s $1.9 trillion March 2021 stimulus program, which included $1,400 relief checks for most households, for helping overheat an already sizzling economy.


Many Americans have been receiving pay increases, but the pace of inflation has more than wiped out those gains for most people.

In February, after accounting for inflation, average hourly wages fell 2.5 percent from a year earlier. It was the 11th straight monthly drop in inflation-adjusted wages.


Egypt In-Focus — PMI sees its biggest slump in 2 years; trade balance deficit falls by 53%


Egypt In-Focus — PMI sees its biggest slump in 2 years; trade balance deficit falls by 53%

Updated 5 min 28 sec ago

Egypt In-Focus — PMI sees its biggest slump in 2 years; trade balance deficit falls by 53%


Egypt In-Focus — PMI sees its biggest slump in 2 years; trade balance deficit falls by 53%


CAIRO: Sharply rising prices and currency devaluation have resulted in Egypt’s non-oil private sector’s biggest drop in two years in June. Additionally, the country’s trade balance deficit fell by 53 percent during April. 

Egypt’s non-oil private sector

Egypt’s non-oil private sector has seen its biggest drop in two years during the month of June, in the face of sharply rising prices and a devalued Egyptian pound, according to the S&P Global Purchasing Managers’ Index. 

The North African country’s PMI registered 45.2 in June, down from 47 during the month earlier. 

Trade balance deficit

Egypt’s trade balance deficit fell by 53 percent during April 2022 to reach $1.7 billion compared to April 2021’s $3.62 billion, according to the Central Agency for Public Mobilization and Statistics.

According to CAPMAS’ monthly bulletin, the country’s exports rose by 54.2 percent to hit $4.94 billion during April, compared to $3.2 billion in the same period last year. 

Acquisition

Cairo-based real estate developer Sixth of October for Development and Investment Co., or Sodic, has submitted a non-binding offer to acquire up to 100 percent of the share capital of state-owned developer Madinet Nasr Housing & Development.

The transaction could value the company, to be acquired, at $328 million, according to MEED.

This comes in line with Sodic’s strategy to expand its portfolio of mixed-use residential communities in Cairo.

Sodic is majority-owned by a consortium comprising Abu Dhabi-based Aldar and ADQ. 

 


US targets Iranian oil and petrochemical trade network

US targets Iranian oil and petrochemical trade network
Updated 9 sec ago

US targets Iranian oil and petrochemical trade network

US targets Iranian oil and petrochemical trade network
  • The US Treasury Department said the network used a web of front companies based in the Gulf

WASHINGTON: The US on Wednesday imposed sanctions on a network of people and entities it accused of helping to deliver and sell Iranian petroleum and petrochemical products to East Asia, applying pressure on Tehran as Washington seeks to revive the 2015 Iran nuclear deal.
The US Treasury Department in a statement said the network used a web of front companies based in the Gulf to facilitate the delivery and sale of hundreds of millions of dollars worth of the products from Iranian companies to East Asia.
In Doha last week, indirect talks between Tehran and Washington ended without a breakthrough over how to salvage Iran’s 2015 JCPOA nuclear pact.
“While the United States is committed to achieving an agreement with Iran that seeks a mutual return to compliance with the Joint Comprehensive Plan of Action, we will continue to use all our authorities to enforce sanctions on the sale of Iranian petroleum and petrochemicals,” Brian Nelson, the Treasury’s under secretary for terrorism and financial intelligence, said in the statement.
Among those designated in Wednesday’s move was Iran-based Jam Petrochemical Company, which the Treasury accused of exporting petrochemical products worth hundreds of millions of dollars to companies throughout East Asia, many of which the Treasury said were sold to Iran Petrochemical Commercial Company for shipment to China.


Oil drops to 12-week low on recession worries

Oil drops to 12-week low on recession worries
Updated 31 min 9 sec ago

Oil drops to 12-week low on recession worries

Oil drops to 12-week low on recession worries

NEW YORK: Oil prices dropped to a 12-week low in volatile trade on Wednesday, extending Tuesday’s heavy losses as growing fears of demand destruction from a global recession outweighed supply concerns.

Brent futures for September delivery fell $2.99, or 2.9 percent, to $99.78 a barrel by 10:57 a.m. EDT (1457 GMT), while US West Texas Intermediate crude fell $3.19, or 3.2 percent, to $96.31.

That puts WTI and Brent on track for their lowest closes since April 11, after Brent fell 9 percent and WTI fell 8 percent on Tuesday.

It also put both benchmarks in technically oversold territory with a relative strength index below 30 for a second day in a row. If Brent closes at that level, it would be the first time it remains in oversold territory for two days since December 2021.

Oil prices were also knocked down by a soaring US dollar , which rose to a near 20-year high against a basket of other currencies.

A stronger US dollar makes oil more expensive for holders of other currencies, which can curb demand.

In China, the world’s biggest oil importer, the market worried that new COVID-19 lockdowns could cut demand.

China’s crude oil imports from Russia, meanwhile, soared 55 percent from a year earlier to a record level in May. Russia displaced Saudi Arabia as the top supplier as refiners cashed in on discounted supplies amid sanctions on Moscow over its invasion of Ukraine.

Adding to downward pressure on oil prices, Equinor ASA said all oil and gas fields affected by a strike in Norway’s petroleum sector are expected to be back in full operation within a couple of days.


NRG Matters: Egypt, UAE agree to establish 10 GW wind power project; Shell to build Europe’s largest hydrogen plant


NRG Matters: Egypt, UAE agree to establish 10 GW wind power project; Shell to build Europe’s largest hydrogen plant

Updated 06 July 2022

NRG Matters: Egypt, UAE agree to establish 10 GW wind power project; Shell to build Europe’s largest hydrogen plant


NRG Matters: Egypt, UAE agree to establish 10 GW wind power project; Shell to build Europe’s largest hydrogen plant


RIYADH: On a macro level, Egypt and the UAE agreed to establish a 10GW wind power project. Zooming in, British oil firm Shell has decided to build Europe’s largest hydrogen plant from renewable power. 

Looking at the bigger picture

• Egypt and the UAE have agreed to establish a 10 GW wind farm, Ahram newspaper reported citing Electricity Minister Mohamed Shaker. 

Without providing further details, Shaker added that the deal is set to be signed after the Eid Al-Adha holidays. 

• The EU plans to become the top investor in the world’s tallest dam in Tajikistan, Reuters reported citing EU officials.

It is part of the strategy aimed at helping the Central Asia cut its reliance on Russian energy. 

Through a micro lens:

• South Korea’s Doosan Heavy Industries and Construction will implement Saudi Aramco’s estimated $500 million Jafurah cogeneration independent steam and power plant project, according to MEED.

• British oil firm Shell has decided to build Europe’s largest plant producing hydrogen from renewable power, according to Bloomberg. 

The Holland Hydrogen I will include 200 MW of electrolyzers, powered by a wind farm off the coast of the Netherlands, which is 10 times the size of the largest existing green hydrogen facility in Europe. 


Techies in Dubai boast top-dollar salaries 

Techies in Dubai boast top-dollar salaries 
Updated 06 July 2022

Techies in Dubai boast top-dollar salaries 

Techies in Dubai boast top-dollar salaries 
  • Software engineers in Dubai earn nearly 30% more than workers in London, Amsterdam and Berlin

LONDON: Software engineers in Dubai with at least three years of experience earn the third highest salaries in the world compared to other global technology hubs, according to global consulting firm Mercer.

When compared to other global tech hubs such as London, Amsterdam, and Berlin, software engineers in Dubai earn nearly 30 percent more.

This reaffirms the UAE’s ambition to attract top digital talent and become a global tech talent magnet that fuels the digital economy’s growth.

Mercer’s Cost of Living 2022 survey also revealed that while Dubai ranked as the 31st most expensive city to live and work in for expatriates this year, its cost of living remains significantly lower than most tech hubs, including London (seventh), Singapore (eighth), New York (11th), San Francisco (19th), and Amsterdam (25th).

Almost 60 percent of UAE employers provide flexible working, reducing employees’ transportation costs. Dubai is also less expensive in terms of housing and rental costs, which accounts for a significant portion of the cost of living in a city.

“Dubai’s status as a global business hub, coupled with its income tax-free environment, world-class infrastructure, safety, and high quality of life make the emirate a very attractive market for talent,” said Vladimir Vrzhovski, workforce mobility leader at Mercer Middle East.

He added: “The demand for tech talent, in particular, will continue to grow in the UAE given the nation’s drive to be a global capital of the digital economy. Above all, a key incentive for tech talent is the opportunity for a significant uplift in salary when compared to other tech hubs, where the cost of living is higher in terms of transportation and housing.

“While inflation and rising fuel costs are a pressure on the cost of living around the globe, Dubai is building a nurturing and highly competitive tech ecosystem that pays highly competitive salaries — creating an environment that promises to attract and retain the best talent globally.

“Over the years, the UAE has also implemented several initiatives that make it easier for talent to live, work and stay in the country. The launch of the Golden Visa program in addition to Dubai’s recently announced Talent Pass aims to attract global professionals in the fields of technology amongst other key areas.

“National initiatives, such as the National Program for Coders launched last year, is designed to attract 100,000 coders from around the globe and set up 1,000 digital companies by 2026.”