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Economic Indicators

Yellen says gasoline tax holiday worth considering as anti-inflation tool

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© Reuters. FILE PHOTO: Gasoline prices are displayed at an Exxon gas station behind American flag in Edgewater, New Jersey, U.S., June 14, 2022. REUTERS/Mike Segar

By David Lawder

TORONTO (Reuters) – U.S. Treasury Secretary Janet Yellen said on Monday that a gasoline tax holiday should be considered as a way to address inflation, even if it is “not perfect” and may not result in all of the reduction passed on to consumers.

Yellen, speaking to reporters after meetings with Canadian Finance Minister Chrystia Freeland in Toronto, said that research suggested that there was likely a higher pass-through rate for cutting higher state fuel taxes than the generally lower federal taxes of 18.4 cents a gallon for gasoline and 24.4 cents for diesel. The levels are unchanged since 1993.

“I think the research suggests that there’s reasonably high pass-through when the state does it to prices at the pump, not full, but reasonably high,” Yellen said. “At the federal level, we have lower much lower gas taxes than at the state level, and the evidence is more mixed.”

High fuel prices have been “a substantial burden on American households,” Yellen said. A fuel tax holiday that temporarily eliminates such taxes, “while not perfect, it is something that should be under consideration” to address inflation, she said.

Yellen rejected the idea of reviving the Canada-U.S. Keystone XL oil pipeline project as a way to ease upward pressure on near-term oil prices caused by Russia’s invasion of Ukraine.

U.S. President Joe Biden on his first day in office rejected the permit for Keystone XL, which would have carried modified bitumen from Canada’s oil sands to refineries in the U.S. Midwest and Gulf Coast, arguing that it would lock in decades of carbon intensive fossil fuel use in the United States.

“I don’t think it’s something that even if it were allowed, would take years to come into completion, so I don’t see it as a short-term measure to address the current situation,” Yellen said. “And longer term, We remain committed to our climate change objectives. But, you know, it’s really up to the president to consider.”

Economic Indicators

Italy says can exceed 3.1% growth target for 2022 despite energy prices

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© Reuters. FILE PHOTO: People walk along the Galleria Vittorio Emanuele II shopping mall in Milan, August 25, 2015. REUTERS/Flavio Lo Scalzo

ROME (Reuters) – Italy’s Treasury said the country’s economy could grow this year by at least as much as Rome’s official target of 3.1% set in April, despite the negative impact of surging energy prices.

Italy grew 0.1% in the first quarter from the previous three months, national statistics bureau ISTAT said last month, revising up a preliminary estimate of a 0.2% contraction.

This left Italy with so-called “carryover” growth of 2.6% this year, assuming gross domestic product was flat in the remaining three quarters, ISTAT said.

Announcing on Monday the bond issuance programme for the third quarter, the Treasury said it expected growth to accelerate in the second quarter, compared with the first three months.

This still makes it plausible to reach or exceed the 2022 growth target of 3.1%, it said in its debt issuance report.

Prime Minister Mario Draghi’s government in April revised down its 2022 economic growth forecast to 3.1% from a 4.7% projection made last September.

The government has budgeted since January more than 33 billion euros ($34.90 billion) to soften the impact of sky-high electricity, gas and petrol costs.

($1 = 0.9456 euros)

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Economic Indicators

French consumer confidence falls more than expected in June

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© Reuters. A woman shops at a fruit and vegetables shop in Paris, France, June 10, 2022. REUTERS/Sarah Meyssonnier

PARIS (Reuters) – French consumer confidence fell more than expected in June, hitting a near nine-year low as concerns about the economic outlook surged in the face of high inflation and political uncertainty, a survey showed on Tuesday.

The INSEE official statistics agency said its consumer confidence index fell to 82 in June from 85 in May and the lowest level since July 2013.

A Reuters poll of 14 economists had an average forecast of 84 with the lowest estimate for 83.

Although households’ concerns about future inflation remained well above the long-term average, they eased in June for the third month in a row.

However, household sentiment about the general economic outlook continued to worsen, falling to the lowest level since May 2020 when France was in the second month of its first and most strict COVID-19 lockdown.

While surging inflation has stressed households in recent months, France’s political situation has added to uncertainty about the economic outlook since President Emmanuel Macron’s party lost its ruling majority in legislative elections this month.

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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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