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Economic Indicators

Britons, shaken by cost-of-living squeeze, cut back on shopping

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© Reuters. FILE PHOTO: Shoppers are seen walking near Bullring shopping centre, owned by mall operator Hammerson, in Birmingham, Britain, November 4, 2020. REUTERS/Andrew Boyers

By William Schomberg

LONDON (Reuters) -British consumers cut back on shopping in May in the face of fast-rising inflation, and a measure of their confidence sank to a record low this month, according to data that underscored the scale of the cost-of-living squeeze.

The Office for National Statistics said on Friday that sales volumes in May fell by 0.5% on the month, a slightly smaller decline than the 0.7% drop expected by economists polled by Reuters.

But the ONS also slashed its estimate for month-on-month sales volumes growth in April to 0.4% from an originally reported 1.4% after an annual review of its seasonal adjustments process.

May’s fall was driven by weaker food sales, Heather Bovill, ONS deputy director for surveys and economic indicators, said.

“Feedback from supermarkets suggested customers were spending less on their food shop, because of the rising cost of living,” she said.

Earlier on Friday, Britain’s longest-running gauge of consumer confidence, the GfK survey, fell to its lowest since records began in 1974.

“The consumer mood is currently darker than in the early stages of the COVID pandemic, the result of the 2016 Brexit referendum and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession,” Joe Staton, client strategy director at GfK, said.

Other data published this week which has raised questions about how much higher the Bank of England can raise interest rates, after five hikes since December, without pushing the economy into a recession.

Worries about the hit to living standards contributed to two defeats on Friday in parliamentary by-elections for Prime Minister Boris Johnson’s Conservative Party.

Johnson responded to the losses by pledging to do more to tackle the cost-of-living crisis.

Overall UK inflation is running at a 40-year high of 9.1% and, according to the Bank of England, is set to rise further to more than 11% in October.

Sterling weakened briefly after the retail sales data before recovering.

The ONS said food store sales fell by 1.6% in May from April, the biggest monthly fall since January.

“Many customers are buying down, particularly with food, choosing value range items where they might previously have bought premium goods,” Helen Dickinson, chief executive of the British Retail Consortium, said.

Automotive fuel sales volumes rose by 1.1%, possibly reflecting a fall in the number of people working exclusively from home, the ONS said.

The ONS said retail sales in the three months to May fell by 1.3% after falling by 1.4% in the three months to April.

Compared with a year ago, sales volumes were 4.7% lower.

Excluding fuel, which has soared in price, sales volumes were down by 0.7% on the month and by 5.7% in annual terms.

Economic Indicators

Peru truckers, farmers to strike over fuel and fertilizer costs

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© Reuters. FILE PHOTO: People walk next to parked trucks during a national transportation strike against fuel prices, in Lima, Peru March 18, 2021. REUTERS/Angela Ponce/File Photo

By Marco Aquino

LIMA (Reuters) – Peru’s truckers and some farm groups will go on strike on Monday after failing to reach agreements with the government seeking measures to reduce the impact of steep global price rises of fuel and fertilizer, sector leaders said on Sunday.

Union leaders met on Friday and Saturday with government representatives, with demands including considering freight transport a “public service” that would reduce costs and curb competition from truckers from neighbor countries.

“We are firm in plans to strike with all our bases nationwide,” the leader of the heavy load haulage and drivers union Marlon Milla told radio station RPP. The union has 400,000 cargo transport units in 14 of the 25 regions of the country.

High global fuel prices linked to Russia’s invasion of Ukraine have stoked unrest in Peru, the world’s No. 2 copper producer, while shortages of fertilizer have raised fears over food supply with the government struggling to secure shipments.

The government of leftist President Pedro Castillo, who has seen his popularity tumble since taking office last year, has taken measures to curb the rising cost of living, but the annual inflation rate remains at around 8%, its highest level in 24 years.

Some farming unions also announced strikes on Monday, in protest at the rise in fertilizer prices and shortages.

Latin American leaders are grappling to bring down spiraling prices despite major interest rate hikes. Trucking protests over fuel costs have hit Argentina while Ecuador is being roiled by protests in part linked to gas prices. [L4N2YB27W]

“The dialogue has not been exhausted, we are in a permanent session of ministers to avoid protest,” Justice Minister Félix Chero told reporters on Sunday. The government is offering subsidies for road tolls and fertilizer costs.

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Economic Indicators

French lawmakers plan $8.4 billion aid for households to fight inflation

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© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7, 2022. REUTERS/Eric Gaillard

PARIS (Reuters) – French lawmakers are drafting a bill to shore-up household buying power by raising some forms of government assistance by 4%, at a cost of 8 billion euros ($8.44 billion) from July to April next year, business daily Les Echos reported on Sunday.

According to the report, the planned increases would apply to welfare benefits for families, unemployed workers and disabled people as well as pension payouts, effective in July.

Housing allowances, meanwhile, could be increased by around 3.5% starting in July as part of a separate bill.

France’s central bank forecast this month that French inflation would average 5.6% this year before falling to 3.4% in 2023 and easing to just below the European Central Bank’s 2% target in 2024.

($1 = 0.9475 euros)

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Economic Indicators

Israel to let more Palestinians work in manufacturing to fill labour shortage

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© Reuters. FILE PHOTO: A Palestinian worker holds up his ID card as he is processed after entering Israel through the Erez Crossing, on the border with Gaza, February 20, 2022. REUTERS/Amir Cohen

By Steven Scheer

JERUSALEM (Reuters) – Israel’s cabinet approved issuing 3,500 additional permits for Palestinian workers in Israel’s manufacturing and services sectors, increasing the number to 12,000 to help relieve a shortage of skilled staff, the Economy Ministry said on Sunday.

Workers from the West Bank and Gaza Strip, territories which Israel captured in the 1967 Middle East War, require permits to cross checkpoints and enter Israel where wages are higher.

Israel employs nearly 100,000 West Bank and Gaza Palestinian workers, according to the Israeli Population and Immigration Authority. But most work in construction or agriculture, with only a comparatively small number given permits for jobs in factories or the services sector.

Israel’s jobless rate is around 3%, and the economy ministry said the existence of 14,000 vacancies in manufacturing was creating a barrier to economic growth.

Economy Minister Orna Barbivai said in a statement that in addition to the extra work permits for Palestinians, the ministry plans to work to increase manufacturing productivity through automation and digitalisation.

The quota for Palestinian workers in manufacturing will automatically be reduced if the annual average unemployment rate in Israel rises above 7.5%, the government said.

Ron Tomer, head of Israel’s Manufacturers’ Association, called the decision to boost numbers of Palestinians allowed to work in Israel a “lifeline” for the industrial sector given severe shortages of workers.

“There are currently thousands of open jobs that manufacturers find difficult to fill, and we believe that increasing the quota will help reduce the severe shortage at least in the short and medium term and help the industry continue to operate and grow in Israel,” he said.

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