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Germany to earmark 430 million euros for fighting world hunger

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© Reuters. FILE PHOTO: A woman collects grain at a camp for the Internally Displaced People in Adadle district in the Somali region, Ethiopia, January 22, 2022. Claire Nevill/World Food Programme/Handout via REUTERS

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BERLIN (Reuters) – Germany is planning to provide an additional 430 million euros ($446.5 million) in aid to fight world hunger, the Development Ministry said on Friday, confirming an earlier report by Spiegel magazine.

Some 238 million euros will go towards supporting the development of sustainable agriculture and education, while around another 192 million euros is earmarked for the “One World Without Hunger” initiative and for the World Food Programme, the ministry said.

The war in Ukraine has sent global prices for grains, cooking oils, fuel and fertilizer soaring, with United Nations agencies warning that the price hikes will worsen a food crisis in Africa.

The Russian invasion of Ukraine since February has disrupted shipping in the Black Sea, a major route for grains and other commodities, throttling exports from Ukraine and Russia.

($1 = 0.9631 euros)

Economic Indicators

Canada inflation creeps higher in April, economists warn more pinch to come

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© Reuters. FILE PHOTO: Tourists shop for souvenirs in Gastown as the pace of cruise ships arriving in Canadian ports picks up, two years after the industry was shuttered due to the COVID-19 pandemic, in Vancouver, British Columbia, Canada May 13, 2022. REUTERS/Jenn

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By Julie Gordon

OTTAWA (Reuters) – Canada’s annual inflation rate rose faster than expected in April, official data showed on Wednesday, and analysts warned soaring used-car and gasoline prices could stoke the trend, raising pressure on the central bank to tighten policy quickly.

The headline annual inflation rate hit 6.8% in April, Statistics Canada data showed, slightly ahead of analyst forecasts that it would stay flat at 6.7%, instead edging closer to the 6.9% hit in January 1991. It was the 13th consecutive month above the Bank of Canada’s 1-3% control range.

Food and shelter prices surged at rates not seen since the early 1980s, while gasoline price gains slowed slightly from March. Excluding food and energy, inflation was up a still-hefty 4.6%.

“Inflation is spreading much more broadly, and at clear risk of getting firmly entrenched,” said Doug Porter, chief economist at BMO Economics. “Barring a deep dive in oil prices in coming weeks and months, we expect that the worst is yet to come.”

Graphic: Canadian inflation and interest rates – https://graphics.reuters.com/CANADA-ECONOMY/INFLATION/lgpdwekqdvo/chart.png

Porter, in a note, said May inflation could exceed 7%, the highest in nearly 40 years, citing record high gasoline prices in the month and changes to how Statistics Canada tracks the impact of used car prices.

Statscan will reshuffle its baskets with its May release and start using more accurate methods to track used-car prices, which have skyrocketed due to supply chain disruptions which, along with geopolitical conflict, are driving rapid price acceleration globally. This has forced central banks to tighten monetary policy more quickly than they had planned to.

“They have to make sure that it doesn’t morph into an inflationary spiral,” said Jimmy Jean, chief economist at Desjardins Group, of the Bank of Canada’s inflation challenge.

“So the way they’re going to be communicating the next steps will be critical here,” he added.

Last week, Bank of Canada deputy governor Toni Gravelle acknowledged the 1% policy rate was “too stimulative” and reiterated that rates, which were dropped to support the economy during the pandemic, need to be higher.

The central bank is widely expected to make a second 50-basis-point increase on June 1 and money markets are betting the policy rate will be around 3% by year-end.

But Canada’s high debt-to-income level and overheated property market mean the Bank will need to tighten with caution.

“It’s kind of a fine line,” said Darcy Briggs, a portfolio manager at Franklin Templeton Canada. “The trick is to try to get inflation down without creating a lot of havoc. But that’s easier said than done.”

The Canadian dollar was trading down about 0.2% at 1.2835 to the greenback, or 77.90 U.S. cents.

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Economic Indicators

Russian economic growth slows to 3.5% y/y in Q1 – Rosstat

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© Reuters. FILE PHOTO: A general view of city skyline and skyscrapers under construction during sunset as the spread of the coronavirus disease (COVID-19) continues in Moscow, Russia May 16, 2020. REUTERS/Maxim Shemetov

(Reuters) – The Russian economy expanded by 3.5% year-on-year in the first quarter of 2022 after growing 5% in the previous quarter, data from federal statistics service Rosstat showed on Wednesday.

The first quarter is expected to have been the last with sound growth before the Russian economy took a hit from sweeping sanctions for Moscow’s decision to send tens of thousands of troops into Ukraine on Feb. 24.

The economy ministry said this week it expected gross domestic product (GDP) to contract by 7.8% in 2022.

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Economic Indicators

Canada inflation creeps higher in April, upping pressure on central bank

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© Reuters. FILE PHOTO: Tourists shop for souvenirs in Gastown as the pace of cruise ships arriving in Canadian ports picks up, two years after the industry was shuttered due to the COVID-19 pandemic, in Vancouver, British Columbia, Canada May 13, 2022. REUTERS/Jenn

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By Julie Gordon

OTTAWA (Reuters) -Canada’s annual inflation rate ticked up again in April, official data showed on Wednesday, exceeding analyst expectations and upping the pressure on the central bank to raise interest rates to keep price expectations in check.

Headline inflation hit 6.8% in April, just beating analyst forecasts that the annual rate would stay flat at 6.7% and edging closer to the 6.9% hit in January 1991, Statistics Canada data showed. It was the 13th consecutive month above the Bank of Canada’s 1-3% control range.

“We were expecting inflation to have marked the peak in March and that didn’t happen,” said Jimmy Jean, chief economist at Desjardins Group.

“When you look at the core measures, you see a pretty strong pickup. So that’s a cause for concern for the Bank of Canada,” he added, noting that the bank needs to ensure that price pressures do not morph into an “inflationary spiral.”

All core measures of inflation rose, including the closely watched CPI Common, which was up 3.2% from an upwardly revised 3.0% in March and above a forecast of 2.9%.

Bank of Canada deputy governor Toni Gravelle last week acknowledged that the policy rate, at 1%, was “too stimulative” and reiterated that interest rates need to be higher.

The central bank is widely expected to make a second 50-basis-point increase when it makes its next decision on June 1 and money markets are betting that the policy rate will be around 3% by year-end.

“It’s kind of a fine line the Bank of Canada needs to go by … because the trick is to try to get inflation down without creating a lot of havoc. But that’s easier said than done,” said Darcy Briggs, a portfolio manager at Franklin Templeton Canada.

British inflation also surged in April, hitting a 40-year high, highlighting the global nature of price surges amid geopolitical conflict and continued supply chain disruptions.

FOOD PRICE PINCH

Grocery prices rose 9.7% in April, the largest increase since September 1981, with consumers paying more for nearly everything at the store, said Statscan. Prices for starchy staple foods like pasta and bread led gains.

“Russia’s invasion of Ukraine in late February put upward price pressure on food products that use wheat,” Statscan said.

Shelter prices in April rose at their fastest annual pace since June 1983, while gasoline prices fell slightly in April from March. Still, consumers paid 36.3% more at the pump for gasoline in April compared with a year-ago.

“This is the relative calm before another downpour in next month’s report, as gasoline prices are tracking a double-digit increase for May alone,” Doug Porter, chief economist at BMO Economist, said in a note.

Statscan, which will change how its tracks used car prices starting with its release next month, said in a separate paper that March’s headline rate would have been 6.9% instead of 6.7% had the new methodology been in place at the last basket update.

The Canadian dollar was trading down 0.1% at 1.2827 to the greenback, or 77.96 U.S. cents.

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