Commodity Prices – RR Reading Wed, 22 Jun 2022 19:34:31 +0000 en-US hourly 1 Commodity Prices – RR Reading 32 32 WATCH: President Joe Biden calls on Congress to pass 3-month gas tax suspension Wed, 22 Jun 2022 19:27:11 +0000

WASHINGTON (AP) — President Joe Biden on Wednesday called on Congress to suspend federal taxes on gasoline and diesel for three months — an election-year move intended to ease financial pressures that was met with doubts by many legislators.

Watch Biden’s remarks in the player above.

The Democratic president also called on states to suspend their own gasoline taxes or provide similar relief, and he publicly criticized the energy industry for prioritizing profits over production. Steps should be taken by lawmakers in Washington and state houses across the country to provide real relief to consumers.

“It won’t reduce all the pain, but it will be a huge help,” Biden said, using the bully pulpit when his administration feels it no longer has direct levers to deal with the surge in violence. gasoline prices. “I am doing my part. I want Congress, states and industry to do their part as well.

In question, the federal tax of 18.4 cents per gallon on gasoline and the federal tax of 24.4 cents per gallon on diesel fuel. If gas savings were fully passed on to consumers, people would save about 3.6% at the pump when prices average about $5 a gallon nationally.

Biden’s push faces challenges in Congress, which must act to suspend the tax, and where many lawmakers, including some from his own party, have expressed reservations. Even many economists view the idea of ​​a gas tax exemption with skepticism.

Democratic House Speaker Nancy Pelosi offered a noncommittal response to Biden’s proposal, saying she would look to see if it received support in Congress.

READ MORE: President Biden says he’s considering a federal gas tax holiday

“We’ll see where the consensus is on the way forward for the president’s proposal in the House and Senate,” Pelosi said.

In his speech, Biden linked rising energy prices to Russia’s invasion of Ukraine and said that “defending freedom, defending democracy was not going to come without a cost to the American people and the rest of the free world”. The president noted that lawmakers supported sanctions against Russia and helped Ukraine despite inflation risks stemming from energy and food shortages.

Democrats, Republicans and independents in Congress have chosen to support Ukraine, “fully knowing the cost”, he said.

“So to all those Republicans in Congress who are criticizing me today for high gas prices in America: are you saying you were wrong to support Ukraine?” Biden said. “Are you saying we would rather have lower gas prices in America than (Russian President Vladimir) Putin’s iron fist in Europe? I do not believe that. ”

The president said “states are now in a strong position to be able to afford to take some of these measures,” thanks to federal support for the COVID-19 Relief Bill 2021. But there is no guarantee that states will draw on their budgets to suspend their gas taxes or to provide consumer rebates, as Biden demands.

Barack Obama, during the 2008 presidential campaign, called the idea of ​​a gas tax exemption a “trick” that allowed politicians to “say they did something”. He also warned that oil companies could offset the tax relief by raising their prices.

The administration says federal and state gasoline tax suspensions and energy companies pouring their profits into production and refining capacity could cut gasoline prices by $1 a gallon.

High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They have driven confidence in the economy to low levels that bode ill for the defense of Democratic control of the House and Senate in November.

Biden’s past efforts to cut gasoline prices — including releasing oil from the U.S. strategic reserve and greater blending of ethanol this summer — have failed to deliver savings at the pump, a risk that carries over to the idea of ​​a gas tax exemption.

There is little the president can do to fix the prices set by global markets, for-profit corporations, consumer demand and the aftershocks of Russia’s invasion of Ukraine and subsequent embargoes. The underlying problem is a shortage of oil and refineries that produce gas, a challenge that a tax holiday may not necessarily solve.

Mark Zandi, chief economist at Moody’s Analytics, estimated that the majority of the 8.6% inflation seen over the past 12 months in the United States has come from rising commodity prices due to the invasion. Russia and continued disruption due to the coronavirus.

LOOK: President Biden hosts climate meeting amid rising gas prices

“In the immediate term, stemming the rise in oil prices is essential,” Zandi said last week, suggesting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help boost supply and lower prices. Republican lawmakers have tried to shift the blame further to Biden, saying he created a hostile environment for domestic oil producers, causing their output to remain below pre-pandemic levels.

Senate Republican Leader Mitch McConnell derided the gas tax exemption as an “ineffective stunt” in a speech on Wednesday. “The big new idea from this ineffective administration is a stupid proposition that senior officials in their own party have already rejected well in advance,” he said.

Rep. Peter DeFazio, Democratic chairman of the House Transportation and Infrastructure Committee, said he would not support suspending the gas tax. “I will work against that. I have the biggest committee in Congress, so we’ll see.

DeFazio said a better solution would be to tax oil companies on “windfall profits.”

House Majority Leader Steny Hoyer, D-Md., said he would consider the proposal because Biden proposed it.

“What I’m not sure is that it will actually have the intended effect in terms of retail price, if in fact we’re going to save the consumer money,” Hoyer said. “Do I think we have the votes? We haven’t counted, so we don’t know yet.

Administration officials said the $10 billion cost of the gas tax exemption would be paid and the Highway Trust Fund would remain in full, even though gas taxes are a substantial source. income for the fund. Officials did not specify new sources of income.

The president also called on energy companies to accept lower profit margins to increase oil production and gasoline refining capacity.

This has increased tensions with oil producers: Biden has judged that the companies make “more money than God”. This set off a series of events in which Chevron chief Michael Wirth sent a letter to the White House saying the administration “has widely sought to criticize, and at times vilify, our industry.”

Asked about the letter, Biden said of Wirth: “He is slightly sensitive. I didn’t know they would be hurt so quickly.

Energy companies are due to meet with Energy Secretary Jennifer Granholm on Thursday to discuss ways to increase supply.

Associated Press writers Lisa Mascaro, Matthew Daly and Kevin Freking contributed to this report.

Crude and palm oil prices fall from record highs, but FMCG firms rule out price cuts Mon, 20 Jun 2022 22:49:00 +0000 Consumer packaged goods makers said they would not cut prices despite the correction in two crucial commodities – crude and palm oil – but would instead slow the pace of price increases.

Palm oil is used in the manufacture of products such as soaps, cookies and noodles, while crude oil is a key input for detergents and packaging, among others. Palm oil fell below $1,300 per metric ton from highs of $1,800 to $1,900, while crude oil retreated to below $107 per barrel, after peaking around $130. Together, they account for more than half of business input costs. While sellers of edible oils slashed prices due to a reduction in import duties in the segment, makers of food, household and personal care products said margins were still under pressure.

“The pace of price increases will slow down, but there won’t be a price drop,” said Anil Chugh, president, Consumer Care Business,

Consumer Care and Lighting, which sells brands such as Santoor. “We’ve only shifted half the total burden of commodity inflation before and instead taken a hit to margins and reduced operating costs.”

Household budgets impacted

The overall fast-moving consumer goods (FMCG) market fell 1% between February and April, according to Kantar. Analysts have said recent deflation is a good sign, but it’s unclear if this will hold.

“Macro events such as rate hikes, drying up of liquidity and risk aversion further benefit the deflationary trend. Separately, competitive exports from Malaysia and Indonesia benefit businesses and consumers Indians,” said Abneesh Roy, senior vice president of wealth management. and consulting firm


The rise in product prices has had an impact on the overall household budget, resulting in a calibrated consumption of non-essential products. Consumers paid 10% more per kg of FMCG products in the February-April period compared to a year ago, while pack sizes were reduced by an average of 15%.

“There will be no further price increases and reduction in packaging weight, which was expected as companies were making incremental price increases,” said Mayank Shah, Category Manager Parle Products, adding that margins would improve for most companies. “Price stability will also help market recovery, both urban and rural, as inflation and rising prices were a major concern.”

Nearly a dozen FMCG-listed companies saw an overall gross margin contraction on average for the 10th consecutive quarter on an annual basis as price increases were offset by further rises in commodity rates.

However, companies are still hoping for a recovery in demand and margins in the second half of the fiscal year, expecting a normal monsoon, strong agricultural prices and easing inflationary pressures in the coming months. come.

Chief executive Harsha V Agarwal said cutting input costs will help, but the company will wait until they stabilize before acting on prices.

“We have to assess the situation properly,” he said. “Any price stability is good for the industry, creating demand and consumers will also have more in hand to spend on discretionary items.”

Global trends, movement of foreign funds, oil prices to guide markets this week: analysts Sun, 19 Jun 2022 05:53:10 +0000

Stock markets should focus on global trends in the absence of any major national events expected this week, while investors should continue to keep an eye on the movement of foreign funds and crude oil prices, analysts said. .

Monsoon progress would also be monitored, they added.

“Relentless selling by FIIs is a major concern for Indian markets. The movement of the rupiah and the development of the monsoon will be other important factors for the market,” said Santosh Meena, Head of Research at Swastika Investmart. ltd.

“In the absence of any major national events, global signals will continue to dictate the trend. Participants will also monitor the trend of Covid cases and the progress of the monsoon,” said Ajit Mishra, VP – Research, Religare Broking Ltd.

Read also | Stocks post biggest weekly loss since 2020 on interest rate concerns

Last week, the Sensex plunged 2,943.02 points or 5.42%, while the Nifty fell 908.30 points or 5.61%.

Weak global signals, a sharp U.S. rate hike and aggressive selling by FIIs (foreign institutional investors) were the main reasons for the turmoil last week, Meena added.

“There are many moving parts that are likely to determine the course of stock market development. In the short term, some of the key factors that are important to monitor include inflation and monetary policy, the trajectory of stock market commodity prices, especially oil, any developments on the Ukraine-Russia war and the outlook for domestic demand and corporate earnings,” said Shibani Kurian, Senior Executive Vice President and Head of Equity Research , Kotak Mahindra Asset Management Company.

Yesha Shah, head of equity research at Samco Securities, said: “As there are no other major domestic or international macro events this week, Indian indices are expected to be jittery, moving in tandem with their peers. world”.

Bajans will have to adjust to rising prices – IMF chief Fri, 17 Jun 2022 14:58:05 +0000

Barbadians are being warned to prepare for ‘tough times’ ahead as commodity prices continue to soar, even as measures are implemented to avoid any further major fallout.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva issued the sober reminder on Thursday, saying Barbadians must weather this difficult time to see better days.

She advised that to help overcome the current challenges, Barbados and the rest of the region should act urgently to enhance food and energy security.

“We are going to live through difficult times this year. [and] next year,” warned Georgieva.

His comments came during a conversation with the Chairman of the Barbados Economic Society (BES), Dr Simon Naitram, and students from the University of the West Indies at the Lloyd Erskine Sandiford Centre.

Responding to a question regarding the dramatic slowdown in foreign direct investment in developing countries due to the COVID-19 pandemic, Georgieva said that although the flow of private capital was now quite stable, “where we are today”. today”. [globally] is a very dangerous area due to multiple factors such as supply chain disruptions [and] the war in Ukraine, [which] put pressure on prices and, as a result, inflation becomes the most pressing concern in many countries”.

“We need inflation under control because price stability is essential for growth, but getting inflation under control means tightening financial conditions, and when that happens we usually see capital outflows. .

“So at the IMF, we are working hard to anticipate which of our members might face balance of payments constraints, and I can tell you that we are ready to step up. We have a lending capacity of $700 billion and we will deploy as much as needed,” the IMF chief said.

She said she warned heavily indebted countries not to wait for things to deteriorate further before moving on to programs that would help protect their economies.

“When capital leaves and nothing comes to guarantee stability, countries can find themselves in a very difficult situation,” warned Georgieva.

“I want to be honest with you all – we’re going through some tough times this year. [and] next year because of this tightening of financial conditions and its consequences.

However, the economist, who is in Barbados on his first trip to the eastern Caribbean, told locals not to “take it so badly”, explaining that the fiscal tightening measures in which some countries are embarked on were aimed at ensuring financial and price stability. , which, in turn, would boost investor confidence.

“Investors would be comfortable investing, there would be jobs, there would be growth. So we have to get through these tougher times,” she said.

Georgieva said locals will also have to play their part by changing their consumption habits and doing what they can to protect the environment.

“We all have to adapt to this more difficult time,” she said.

The senior IMF official said now is the time for Barbados and other countries in the region to increase investment in the agriculture and renewable energy sectors and “rethink supply chains and rethink security of supply, especially for food”.

She also agreed that while governments should seek to protect the most vulnerable, those just above the poverty line may also need help.

“In this environment, we also see the middle class quite affected. Measures must therefore target the most vulnerable. There must also be some appreciation for those who are above the poverty line but not by much,” Georgieva explained.

“What we recommend and what we see being put in place is the recognition that inequalities have increased during the pandemic. . . . This cannot continue because it undermines the social foundation and, in this sense, the measures aimed at more progressive taxation [are required]so those who can afford to help more do so.

At the same time, she said the IMF was “working hard” to identify ways in which it could better help member countries achieve their sustainable development goals.

The chief executive pointed out that the Washington-based international financial institution has “stepped up significantly since the very beginning of the COVID crisis” to provide financing to nearly 100 of its 190 member states.

Responding to a question from one of the students about the IMF’s plans to help member countries recover from the setback caused by the COVID-19 pandemic and how it planned to help them in the future, she said. recalled that in addition to the emergency financing which was also extended to Barbados, the IMF also enabled countries to access loans through the Special Drawing Rights (SDR) facility.

Georgieva is on a four-day official visit here. [email protected]

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As risks rain down on emerging markets, unrest grows Wed, 15 Jun 2022 22:21:12 +0000
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When global economic watchers talk about the outlook for so-called emerging markets these days, they use alarming terms: they see a toxic cocktail of risk, warn of a train crash, and brace for a potential stunt. of disasters. It is the fallout from a mix of external shocks and growing financial problems that is sweeping through low- and middle-income countries, creating perhaps the greatest confluence of challenges since the 1990s, when a series of successive crises sank economies and overthrew governments. By mid-2022, rising food and energy prices had fueled street protests in countries like Sri Lanka and Peru.

1. What triggered the concern?

A post-pandemic inflation spurt is a source of tension in countries that need US dollars for energy, medicine and food imports. Food costs account for around 40% of consumer spending in places like sub-Saharan Africa, more than double the share in advanced economies. To rein in rising prices, the US Federal Reserve is embarking on its most aggressive round of interest rate hikes in two decades, helping to push the dollar higher and other currencies lower. So debt-servicing costs are rising — hot on the heels of developing countries borrowing billions in foreign currency to fight Covid-19.

2. Did the pandemic cause this?

The health crisis has certainly created a backdrop of social tension, which is one reason economists are beginning to suspect a broader trend in the upheavals hitting some of the poorer corners of the globe. Peru, which had one of the highest Covid death rates in the world, was rocked by weeks of violence in March and April as farmers and truckers protested rising fuel and fertilizer costs.

The current dynamics may trigger panic attacks among international investors and sudden capital outflows from the most exposed countries. These are places like Egypt, the world’s largest wheat importer and one of the IMF’s biggest borrowers in recent years. After Russia’s invasion of Ukraine sent global commodity prices soaring, the country’s central bank let the Egyptian pound weaken by more than 15% in a matter of hours and raised the rate of benchmark interest for the first time in five years in a context of hard currency flight.

4. Where else are problems brewing?

Sri Lanka is seen as a prime example of how food and fuel shortages can turn into violent street protests and destabilize an unpopular government. The South Asian nation defaulted on its foreign debt in May for the first time since gaining independence from Britain in 1948. A handful of other nations, including Pakistan, Tunisia, Ethiopia, Ghana and El Salvador, were likely to follow suit, according to Bloomberg Economics. By mid-June, about 15 emerging countries had government bonds trading with yields at least 10 percentage points higher than US Treasuries, a distress benchmark. This compared to six a year earlier. While the direct effect of a series of defaults on the global economy would be small, explosions in the developing world have a habit of spreading far beyond their starting points. That’s what happened in 1997, when a currency devaluation in Thailand sparked a wider Asian crisis, ended Indonesian President Suharto’s 32-year rule and ultimately led to the default of Russia’s domestic debt.

In some ways, the surge in global commodity prices has been a boon for resource-rich regions like Latin America. Beef and copper exports have grown rapidly in places like Brazil and Chile. But with much of the region’s fuel and fertilizer imported, the concern is that higher prices may still feed off each other. In Brazil, where tensions are high ahead of October elections, President Jair Bolsonaro’s government has used the commodity windfall to expand aid to the poor after a spike in gasoline prices contributed to push inflation above 12% in April.

6. What is the answer?

The World Bank mobilized a $170 billion crisis response program in April, more than the $157 billion spent on its initial Covid-19 response. More countries have started bailout talks with the IMF. And although many rich countries have given developing countries a free pass to pay down their debt while they deal with the virus, progress has been slow on a plan to help debt-ridden countries restructure this that they must. A collective $35 billion bill is due this year. The World Bank, in a revision of a pre-pandemic forecast, predicted in April that the combination of forces will mean that 75 to 95 million people who would have left extreme poverty this year will remain there.

More stories like this are available at

]]> Vietnam will strictly control commodity prices | Company Tue, 14 Jun 2022 04:43:07 +0000
Residents of Ho Chi Minh City buy eggs from Co.opmart Nguyen Kiem, located in Phu Nhuan district. (Photo: SGGP)

Deputy Prime Minister Le Minh Khai pointed out that inflationary pressure in the first 5 months is extremely high as many countries adopt loose monetary policy, raise gas and food prices due to instability between the Russia and Ukraine, high demands for raw materials after the fourth Covid-19 epidemic in the country.

The government, prime minister and relevant ministries, localities have implemented various measures to effectively control inflation in Vietnam during these months. However, this pressure still continues in the near future, especially when the price of fuel shows no signs of falling, which may lead to higher prices for other products and services.

Therefore, the government’s price control task encounters more challenges. The Deputy Prime Minister requested that the State Bank of Vietnam cooperate with the Ministry of Finance and relevant ministries to implement an active and flexible monetary policy, closely linked to fiscal policy and other macroeconomic policies to maintain control. core inflation in 2022, forming the basis for general inflation control.

Vietnam to strictly control commodity prices ảnh 2

All localities are urged to strengthen their monitoring of the local market and adopt price stabilization solutions. Whenever abnormal signs are detected, they should be carefully investigated to address them in a timely manner. Essential products must be subject to stricter surveillance to ensure an adequate standard of living for citizens. Forecasts must be made quickly to design flexible administrative measures so that essential products are always sufficient for production and consumption.

Goods and services priced by the government should be carefully monitored, carefully considering possible influences before deciding on a price increase. These goods and services tariffed by enterprises under the law, there must be timely rectification if abnormal situations occur.

As for fuel, Deputy Prime Minister Khai called for its prices to be flexible, as well as the reasonable use of the Price Stabilization Fund and import plans if necessary.

He highlighted demands to ensure food security; prepare a clear roadmap for raising school fees, especially in public schools; study the law of prices to control the prices of textbooks so that all learners can access them at an affordable price.

By Phan Thao – Translated by Huong Vuong

Editorial: Rising Fuel Prices, Rising Commodity Prices Sun, 12 Jun 2022 13:25:44 +0000

IF YOU have been commuting lately, you may have noticed the difficulty of getting a ride in a public utility vehicle (PUV) like a taxi or jeep.

According to transport groups and some drivers, it is not easy to get around these days as some drivers have chosen to quit driving and seek other employment due to rising oil prices.

In April this year, several taxi drivers revealed to SunStar Davao that their daily income had decreased due to the recent price hike.

Tots, a 58-year-old taxi driver, revealed in a previous interview in April that he had stopped driving due to the continued rise in fuel prices.

“Sa pagkakaron, lisod kaayo. Ang unsay income karon, itapal na lang sa essence ug renta ugma (From now on, it is really difficult to pursue stable income. My driving income would mainly go to buying gasoline, while at the same time, another part would go to the taxi rent the next day),” he said.

Tots said he drove 15 to 16 hours a day just to mitigate rising fuel prices.

Transmission-Piston (Piston) General Secretary Larry Arguelles said fuel prices had risen about 30 PUV since January 2022. He said it was not easy for drivers and operators to PUV to cope with this as they also had other expenses — car rental, daily necessities, spare parts and tires, to name a few.

“Napugos sila [operators] and undang lang wala na sila mapuga in ilang sakyanan. Mahimo lamang dakong problema sila niini (That’s why some operators are forced to stop operations because they can’t make money from their units anymore. It would just be an extra burden for them),” he said. -he declares.

Arguelles said that on a certain route with 30 units in service, only 10 are currently in service.

However, rising fuel prices don’t just affect drivers. It also has a domino effect on our local economy.

The Philippine Statistics Authority (PSA) announced on June 7 that headline inflation rose to 5.4% in May 2022 from 4.9% the previous month.

“The Russian-Ukrainian conflict has disrupted the global supply chain and driven up commodity prices, especially for fuel,” Socio-Economic Planning Secretary Karl Kendrick T. Chua said.

PSA said in a statement that the rise in inflation was “due to higher annual growths in the food and non-alcoholic beverages index at 4.9% and the transport index at 14.6% “.

Food inflation also “increased further to 5.2% in May 2022, from 4.0% in April 2022”.

“The rise in food inflation was mainly influenced by the double-digit annual growth in the index of vegetables, tubers, plantains, cooking bananas and pulses at 15.2%, and the oil and fat index at 13.6%,” PSA said.

The agency also noted a slight rise in inflation for flour, bread and other bakery products, pasta and other cereals (4.8%); Meat and other parts of slaughtered land animals (5.4 percent); Fish and other seafood (6.2%); Milk, other dairy products and eggs (1.5%); Sugar, confectionery and desserts (8.7%); and Prepared meals and other food products, nec, (3.5 per cent).

Chua said that to mitigate inflation, the government should continue to implement “the issuance of Executive Order (EO) No. 171 and the government’s fuel subsidy program.”

“EO 171 extends the validity of EO 134 and EO 135, which lowered most favored nation (MFN) tariff rates for the importation of pork and rice. EO also reduces MFN tariff rates for maize at 5% in-quota and 15% out-of-quota, citing that maize accounts for more than 50% of the total production cost of large-scale broiler and pig farms,” Neda said in a statement. communicated.

Regarding the fuel subsidy, Neda said that “the government has increased the total targeted subsidy budget to 6.1 billion pesos.”

“As of June 1, 2022, over 180,000 PUV drivers and operators have received their fuel subsidy of 6,500 PUV under the Pantawid Pasada program. At the same time, over 158,000 farmers and fishermen are also expected to receive 3,000 PUV in the form of fuel discounts,” Neda added.

Seas will be rough for Filipinos and local businesses in the coming months as prices for goods and transportation rise. The meager savings or income that most of us have will be “gobbled up” by the rising prices of various commodities. At present, many Filipinos and local businesses are trying to get through the month or day on a shoestring budget.

We hope the government can find other solutions that will slow or mitigate the effects of rising fuel and commodity prices.

Live News: Russia cuts its policy rate for the fourth time since March Fri, 10 Jun 2022 13:40:28 +0000

The UK’s eight largest banks have all drawn up plans that would allow them to fail “safely” without harming taxpayers or customers, but are expected to make other improvements to improve the process, the Bank said on Friday. from England.

The financial year marked the first time that regulators have given their verdict on the resolvability plans of the UK’s eight largest banks and building societies, including Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest, Santander UK, Standard Chartered and Virgin Money UK.

The plans are the latest part of a package of measures to ensure that bank failures are more orderly and less destructive than the 2007 global financial crisis. are structured so that they can be closed safely. if they encounter difficulties, without leaving taxpayers behind.

“Resolving a large bank safely will always be a complex challenge, so it’s important that we and the large banks continue to prioritize work on this issue,” Dave Ramsden, deputy governor for financial institutions, said Friday. markets and banks at the Bank of England.

The central bank said it found shortcomings in some of the companies’ plans as well as “areas for improvement”.

HSBC said it has been asked to take steps to improve the resolvability of its international infrastructure which spans 64 countries and territories.

“The changes that would be required to this infrastructure to support certain restructuring actions, which may be required for resolution, would be complex,” the bank said, adding that the work would be carried out over a “multi-year period.”

Barclays said it had “identified some areas for refinement, including the continued optimization of processes and the use of automation where appropriate, which it will continue to drive forward.”

Poland hikes rates to 14-year high as central bank battles inflation Wed, 08 Jun 2022 14:45:00 +0000

WARSAW, June 8 (Reuters) – Poland’s central bank on Wednesday raised its main interest rate to its highest level since 2008, raising the cost of credit by 75 basis points to 6.00%, as it struggles against inflation levels not seen for almost a quarter of a year. century.

Russia’s invasion of Ukraine poses a dual threat to Central European economies, on the one hand fueling price growth by disrupting global supply chains and commodity markets, and on the other share creating the risk of slowing growth as business confidence weakens.

“A continuation of relatively favorable economic conditions can be expected in the coming quarters, although a further slowdown in economic growth is expected, while the national and global outlook is subject to significant uncertainty,” said the National Bank of Poland (NBP) in a press release. A declaration.

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Central bankers in Hungary and the Czech Republic have signaled that growth risks mean they will slow the pace of policy tightening.

In May, the National Bank of Hungary (NBH) raised its main interest rate by just 50 basis points, half the pace of rate hikes in recent months.

However, after the NBP raised rates less than expected in May, Governor Adam Glapinski said that was not a sign of a slowdown in the tightening in Poland.

“We believe a backdrop of tight labor market conditions and soaring inflation will drive further significant increases in upcoming meetings,” said Liam Peach, Emerging Europe economist at Capital Economics.

Inflation in Poland was 13.9% in May according to a flash estimate from the statistics office, well above the central bank’s target range of 1.5% to 3.5%.

“High inflation is mainly the result of a sharp rise in world prices for energy and agricultural commodities – driven, to a large extent, by the fallout from Russian military aggression against Ukraine – and earlier increases regulated tariffs,” the NBP said.

Of 20 analysts polled by Reuters ahead of Wednesday’s decision in Poland, 15 forecast a 75 basis point hike, four forecast a 50 basis point increase and one a 100 basis point increase.

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Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz and Anna Wlodarczak-Semczuk; Editing by Mark Heinrich and Alison Williams

Our standards: The Thomson Reuters Trust Principles.

Lessons from the price shock of the Ukrainian crisis Sat, 04 Jun 2022 03:23:57 +0000 The Russian-Ukrainian conflict, which has now lasted for more than three months, will lead to major and long-term changes in the world trade in energy and raw materials. Western sanctions against Russia and efforts by European nations to diversify their energy supplies are already causing market distortions and high prices. These, in turn, began to trigger inflation and widespread financial hardship. In India, the commodity price shock across the board could derail the economy as it recovers from the effects of Covid-19.

The conflict has already had a global economic impact. Crude oil prices are at their highest level since 2014; the price of LNG has never been so high, fertilizers and food are on the rise and the markets for several other raw materials such as nickel have been disrupted. Expensive commodities are already causing difficulties in India’s neighbourhood, for example in Sri Lanka and Pakistan. In the case of Sri Lanka, economic turmoil due to high inflation, shortages of basic necessities and default on foreign debt payments also caused a political crisis.

The warning signs were visible long before the start of the conflict in Ukraine. Insufficient investment in oil and gas production in previous years led to high prices and shortages. A number of European investors, such as the Norwegian sovereign wealth fund, have announced that they will no longer invest in traditional fuels – oil, gas, coal. With investors on the sidelines, the conflict in Ukraine precipitated the inevitable.

Even without the conflict, another factor could have triggered the price shock. Natural gas is used as a feedstock for fertilizers. An energy shock is then inevitably followed by a food price shock.

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What does the future hold? The seriousness of the situation depends on several factors – the duration of the conflict in Ukraine, the conditions under which it is resolved, if it is, and the response of the United States and its allies, in particular with regard to punishments.

Although these results cannot be predicted, some trends are evident. First, whatever the outcome of the conflict, the European Union’s ties with Russia will continue to be strained. In the immediate term, the EU is trying to source raw materials – mainly oil and natural gas, but also fertilizers, agricultural products and metals – from non-Russian sources. This will lead to distortions and price spikes for these products on the world market, as can already be seen in the natural gas market, which grew by 300% last year.

Second, sanctions against Russia are unlikely to achieve the desired political outcome. The United States and its allies quickly impose sanctions – and these are rarely, if ever, withdrawn. Iran has been under US sanctions since 1979, as has Venezuela for more than a decade. In both cases, the sanctions failed to achieve the desired political outcome of regime or behavior change. As Russia is much better placed than either of these two countries to deal with the sanctions, the restrictions are likely to last a long time.

Third, the high price of energy and the resulting inflation show why much of the emerging world is unwilling and unable to go with the West on current sanctions. Russia makes up 11% of the world’s landmass and is among the world’s top five producers and exporters of oil, gas, fertilizers and other essential raw materials like nickel. He is too big to be replaced as a supplier. Attempts to buy from other countries will only distort the markets further. In emerging economies, it can stir up public anger and political unrest, as seen in Tunisia and other Arab countries from 2010.

Major emerging economies such as China, India and Brazil will ignore sanctions on their core economic interests, especially food, fertilizer and energy. For India in particular, its reliance on these essentials is unlikely to decrease significantly over the next 15-20 years. In the immediate term, the country should work with other similar economies to ensure that Russia is not excluded from global commodity markets. In the long term, it must strive to insulate its supply chains from global political crises.

(Bhandari is Senior Fellow for Energy, Investment and Connectivity, Gateway House. He is also the author of India and the Changing Geopolitics of Oil)