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EU stings renewable energy suppliers with €140bn windfall tax

The Telegraph logo The Telegraph 14/09/2022 James Warrington, Giulia Bottaro
European Commission President Ursula von der Leyen energy windfall tax crisis Russia - CHRISTOPHE PETIT TESSON/EPA-EFE/Shutterstock © CHRISTOPHE PETIT TESSON/EPA-EFE/Shutterstock European Commission President Ursula von der Leyen energy windfall tax crisis Russia - CHRISTOPHE PETIT TESSON/EPA-EFE/Shutterstock

The EU has laid out plans to raise €140bn (£121bn) by capping revenues for non-gas energy suppliers as part of a radical effort to halt the escalating crisis.

Ursula von der Leyen, European Commission President, said the funds would come from capping revenues for producers of low-cost power such as renewables and nuclear.

She told politicians in Brussels: “In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers. In these times, profits must be shared and channelled to those who need it most.”

Other measures under consideration include a windfall tax on fossil fuel companies and steps to cut energy use to avoid blackouts this winter.

However, the bloc has stepped back from an initial plan to cap Russian gas prices amid division among member states over whether such a move would help or harm efforts to secure energy supplies.

Ms von der Leyen also said the EU was working to establish a “more representative benchmark” for gas and was exploring a wider overhaul of the electricity market to decouple power prices from the soaring cost of gas.

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06:29 PM

Wrapping up

That's all from us today, thank you for following! Before you go, check out the latest stories from our reporters:

06:22 PM

JP Morgan sees Big Oil holding back investment on EU windfall tax 

A new energy windfall tax in the European Union may give oil majors a reason to spurn investment in favor of returning record profits to shareholders, according to JP Morgan. 

The tax is part of a raft of measures proposed by the EU to funnel profits from the energy industry to alleviate the burden of high prices driven by Russia’s restriction of natural gas supplies.

The proposal could create uncertainty that deters companies such as Shell, TotalEnergies and BP from spending on new production, according to Christyan Malek, the bank’s global head of energy strategy.

“If you’re planning your capital budget, you have to think twice now that you have a new risk,” Malek said in an interview. “It encourages majors to return cash to shareholders as they use that free cashflow that could have been used in investment.”

05:48 PM

IMF chief warns cold winter could spark ‘unrest’ in Europe as EU launches €140bn energy raid

Europe could face social unrest if there is a cold winter, the head of the International Monetary Fund (IMF) has suggested, as Brussels prepares a €140bn (£121bn) raid on the energy industry to help solve the crisis. Rachel Millard has the story:

Kristalina Georgieva, managing director of the International Monetary Fund, raised the spectre of unrest in Europe if it proves to be a particularly “harsh” winter.

“There is certainly fear of recession in some countries, or even if it is not recession, that it would feel like recession this winter,” she said.

“If Mother Nature decides not to cooperate, and the winter is actually harsh, that could lead to some social unrest.”

05:25 PM

FTSE in decline

Britain's main stock indexes have fallen after a surprise drop in consumer prices did little to calm speculation of a large interest rate hike from the Bank of England next week.

The FTSE 100 slid 1.5pc and the FTSE 250 fell 1.7pc, extending losses from yesterday when a hotter-than-expected US inflation reading raised bets for more aggressive policy tightening in the world's largest economy and sparked a global equities sell-off.

"The market is taking the view that generally we're living in a higher inflation regime despite today's inflation numbers," Andrea Cicione, head of strategy at TS Lombard said.

"One data point doesn't make a trend and inflation could actually get worse in months to come. So the Bank of England will want to see a definite trend of lower inflation before they start reining back the hawkish rhetoric."

04:59 PM

Irish property prices return to pre-financial crisis levels 

Irish property prices have bounced back to levels not witnessed since before the 2008 financial crisis as the market recovers from a pandemic-induced lull. Simon Foy reports:

In the year to July, residential property prices jumped by 13pc to surpass levels last recorded in 2007, when a credit-fuelled boom triggered a property crash that decimated Ireland’s housing market. 

Analysts have this time attributed price growth to a lack of supply rather than excessive credit, making housing a key political issue in the country. 

While prices have continued to grow rapidly, the 13pc jump in July represents the slowest rate of growth in nearly a year. In the year to June, prices climbed by 14pc.   

04:32 PM

Italian government moves to restore pay cap for top civil servants 

The Italian government has moved to reverse a controversial attempt by the outgoing parliament to weaken a salary cap for senior public servants.

In a surprise vote yesterday, the upper house Senate had approved a measure to allow top officials in the police, the armed forces and in government ministries to be paid more than the current ceiling pegged at €240,000.

The proposal, promoted by the centre-right Forza Italia party of former Prime Minister Silvio Berlusconi, was included at the last minute in an aid package drawn up to help businesses and families cope with the energy crisis. The bill still needs final approval by the lower house Chamber.

The office of Prime Minister Mario Draghi said in a statement that the government would present an amendment in parliament to restore the salary cap.

04:07 PM

Handing over

That's all from me for today – thanks for following! Handing over now to Giulia Bottaro.

03:49 PM

Women think prices rise faster than men because they 'like round numbers', claims ECB

Women believe prices rise faster than men because they do most of the shopping and prefer "round numbers", according to the European Central Bank.

Szu Ping Chan has more:

The ECB, which sets interest rates for 19 eurozone economies, also suggested that older people's perceptions of inflation were stuck in the past.

Christine Lagarde, President of the central bank, has spoken out about "biases and gender stereotypes" throughout her career before she became the first woman to lead both the International Monetary Fund and ECB.

The central bank, which said its research was designed to challenge stereotypes, said men cared more about house prices, cars and other transport costs, while women worried more about the weekly food shop.

"The predominant role of perceived food inflation holds for both women and men but is especially true for women," the ECB said.

 

It added that the gap in expectations between the sexes was so large that women believed overall price rises were a full percentage point higher than men.  

03:35 PM

Zara owner to stockpile clothes amid shortage fears

Zara Inditex - REUTERS/Juan Medina/File Photo © REUTERS/Juan Medina/File Photo Zara Inditex - REUTERS/Juan Medina/File Photo

Inditex, the world’s largest fashion retailer and owner of Zara, is preparing to ramp up manufacturing and stockpile clothing amid fears that supply chain chaos will trigger shortages this winter. 

Laura Onita reports:

The company, which also owns Massimo Dutti and Pull & Bear, said it has increased production of its autumn and winter ranges “in the face of possible supply chain tensions”. 

The Spanish retailer said the value of its inventory at the end of July was €3.6bn (£3.1bn), around 43pc higher than the same time last year. 

Inditex’s flexible supply chain structure means it is able to get fashion trends from the catwalk into its high street shops within weeks. 

The retailer sends new designs to stores every two weeks on average, while its competitors traditionally change theirs every two or three months. 

This has made the retailer largely immune to some of the supply chain disruption its rivals have experienced in recent years owing to the pandemic. 

But on Wednesday, chief executive Óscar García said “increasing inventory at the beginning of the season is something you are hearing widely from other market participants”, adding that Inditex was no exception.

03:09 PM

France to cap power price increases at 15pc

Increases in French energy prices for households will be capped at 15pc as the country tries to keep a lid on soaring costs.

Elisabeth Borne, France's Prime Minister, said the maximum 15pc price cap increase for gas would take effect next January, while the 15pc price cap increase on electricity would take effect in February.

She said: "We are going to take action on both a European level and on a national level."

It comes after the EU announced plans to hit energy companies with €140bn of windfall taxes, while it's also looking at ways to limit consumption this winter.

02:57 PM

Aston Martin facing £150m lawsuit over Valkyrie supercar

Aston Martin Valkyrie © Provided by The Telegraph Aston Martin Valkyrie

Aston Martin is reportedly being sued by two former dealers who claim they're owed £150m for underwriting the development of the troubled Valkyrie hypercar.

The luxury car brand revealed that Nebula Project — a Swiss company owned by Andreas Baenziger and Florian Kamelger — had filed a lawsuit in London.

While details of the case aren't public, the Financial Times reports it centres on a deal to underwrite the development of the £2.5mn Valkyrie hypercar.

02:38 PM

Wall Street opens higher after inflation sell-off

Wall Street's main indices have opened higher following a sharp selloff in the previous session after red-hot inflation data fuelled worries about how much and how long the Federal Reserve will hike interest rates.

The S&P 500 rose 0.2pc at the opening bell, while the Dow Jones ticked up 0.1pc. The Nasdaq gained 0.4pc.

02:23 PM

Carlsberg shares drop on energy rationing fears

Carlsberg energy rationing - REUTERS/David Loh/File Photo © REUTERS/David Loh/File Photo Carlsberg energy rationing - REUTERS/David Loh/File Photo

Shares in Carlsberg dropped as much as 4.9pc amid worries  about the prospect of energy rationing this winter.

The EU is discussing plans to reduce consumption, while France's grid operator has said it expects to ask households, businesses and local governments to reduce energy use over the next six months.

The sombre mood spread to rival brewers, with Heineken falling 2.6pc and Budweiser owner AB InBev down 2.2pc.

02:11 PM

McDonald's to close all restaurants on Monday

McDonald's Queen funeral - REUTERS/Maja Smiejkowska © REUTERS/Maja Smiejkowska McDonald's Queen funeral - REUTERS/Maja Smiejkowska

McDonald's has said it will close all its UK restaurants on Monday for the Queen's funeral.

The fast food chain, which has more than 1,200 outlets across the country, said they'll all be shut until 5pm.

It's the latest business to announce closures on Monday, alongside John Lewis, Waitrose, Asda and Primark.

01:50 PM

Heathrow flights delayed to 'ensure silence'

Heathrow airport flights Queen - Jonathan Brady/PA Wire © Jonathan Brady/PA Wire Heathrow airport flights Queen - Jonathan Brady/PA Wire

Flights at Heathrow Airport will be delayed this afternoon so they do not disturb the Queen's coffin procession.

The London airport said in a statement that "out of respect" for the mourning period it will be making "appropriate alterations to our operation".

These include flights being disrupted between 1.50pm and 3.40pm today to "ensure silence over central London as the ceremonial procession moves from Buckingham Palace to Westminster Hall".

The airport added: "Passengers will be notified by their airlines directly of any changes to flights.

"We anticipate further changes to the Heathrow operation on Monday September 19, when Her Majesty's funeral is due to take place, and will communicate those in more detail over coming days.

"We apologise for the disruption these changes cause, as we work to limit the impact on the upcoming events."

01:35 PM

Google fails to overturn £3.5bn EU fine for unfairly promoting its search engine on phones

Google has failed to overturn a €4bn (£3.5bn) fine imposed by the European Commission for unfairly promoting its search engine on people's phones, writes Gareth Corfield.

An EU court has upheld the earlier fine, which was levied after competition watchdogs concluded Google had breached competition laws.

Investigators concluded the tech giant had unfairly forced smartphone makers such as Samsung and Sony to set Google as their phones’ default internet search engine on devices that used Google's Android operating system.

In addition, Android handset makers also had to install Google Chrome as their devices’ default web browser if they wanted to pre-install other apps such as the Google Play Store or Gmail.

In a judgment handed down on Wednesday morning, the General Court of the EU said Google had been “foreclosing its competitors to the detriment of consumers”.

In a minor concession to Google the EU’s judges reduced the fine to €4.1bn, trimming €200m from the Commission’s original level of €4.3bn.

Google said it was “disappointed” that the court did not completely annul the EU Commission’s decision.

​Read Gareth's full story here

12:24 PM

Government to set out energy support for businesses next week

The Government will set out further details of its plan to support businesses through the energy crisis next week, Prime Minister Liz Truss's spokesman has said.

The spokesman said the scheme would help with October energy bills and be backdated if necessary.

He told reporters: "We will confirm further details of the business support scheme next week. The scheme will support businesses with their October energy bills and that includes through backdating if necessary.

"We are speaking to energy companies and businesses and representative organisations to provide them with reassurance on the points I've just set out."

12:13 PM

US futures rebound after Wall Street rout

US futures have pushed higher as tech stocks rebounded from yesterday's sharp declines in the wake of hotter-than-expected inflation figures.

All three major indices racked up their biggest one-day percentage declines since June 2020 after a hot consumer price index report cemented bets that the Federal Reserve could go ahead with the third straight 75 basis-point increase in rates next week.

Futures tracking the S&P 500 and Nasdaq rose 0.6pc, while the Dow Jones was up 0.4pc.

Meanwhile, the FTSE 100 has extended its losses to 1pc.

11:59 AM

Elon Musk says Fed should cut interest rates

Elon Musk has said the Federal Reserve should cut interest rates by 0.25pc, saying that a major hike would risk deflation. 

The suggestion by the world’s richest man came in response to a Twitter user who asked Musk what the Fed should do, and after an earlier post from Ark Investment Management’s Cathie Wood. 

Unexpectedly hot US inflation data yesterday virtually assured markets that the Fed will raise rates by 75 basis points next week.

11:27 AM

Starbucks 'lost its way', admits boss

Starbucks coffee - REUTERS/Mohammad Khursheed/File Photo © REUTERS/Mohammad Khursheed/File Photo Starbucks coffee - REUTERS/Mohammad Khursheed/File Photo

Starbucks "lost its way" in recent years, interim chief Howard Schultz has admitted, as he plots new investment to revive growth in US stores amid rumours of a UK sale.

Hannah Boland has more:

Starbucks last night unveiled plans to spend $450m (£390m) on its North American stores next year, including fitting them with new equipment to make its hot and cold drinks faster. 

The kit is expected to cut the time needed to make a Frappuccino by more than half. 

Mr Schultz said he believed that "the best days of Starbucks are ahead of us", as he readies to hand the reins to incoming chief executive Laxman Narasimhan, who is leaving Reckitt Benckiser.

Mr Schultz stepped in as Starbucks interim chief executive in March this year for his third term after his successor in the CEO post, Kevin Johnson, said he would be retiring. Mr Narasimhan is expected to take over next month. 

The move to invest heavily in the US comes amid speculation the UK business could be sold off. Earlier this summer, reports suggested Starbucks had appointed advisors over a sale, although the company said it was "not in a formal sale process for the company’s UK business”.

11:05 AM

Gas prices edge higher as EU holds off on price cap

Gas prices pushed higher this morning as the EU omitted a cap on Russian imports from its plans to tackle the energy crisis.

Benchmark European prices were up 5.7pc, while the UK equivalent gained 5.4pc.

The EU unveiled plans to shield citizens and businesses from surging energy prices, including through a levy on windfall profits from energy companies and cuts in electricity usage across the bloc.

However, the bloc backed away from an initial plan to cap Russian gas prices.

EU countries are divided over whether broader price caps would help or harm Europe's efforts to secure winter energy supplies, although diplomats from some states are still pushing for the measure.

10:41 AM

Pubs hit back over energy support delay

Pubs have hit back at the Government over reports incoming energy bills support for businesses could be delayed.

The Financial Times reported that companies could have to wait longer than households for help due to the difficulty of launching a support system before November.

Emma McClarkin, chief executive of the British Beer and Pub Association, said:

Pubs and brewers will not be able to wait days, let alone months to get clarity on their energy bills. Many are making decisions now as to whether they will have to close this winter. 

We need urgent clarity on whether this cap will deliver for businesses and help them out of a crisis that has been building for months and urge the Chancellor to seriously consider what immediate reassurance he can give for the thousands of business owners currently in despair.

10:23 AM

Germany considers Uniper nationalisation

Germany Uniper nationalisation - REUTERS/Thilo Schmuelgen/File Photo/File Photo © REUTERS/Thilo Schmuelgen/File Photo/File Photo Germany Uniper nationalisation - REUTERS/Thilo Schmuelgen/File Photo/File Photo

The German government is said to be considering increasing its stake in energy firm Uniper or even fully nationalising it in a bid to prevent a collapse of the country's energy system.

Germany's biggest gas importer needs more help from the state after already tapping into a support package worth as much as €20bn (£17.3bn), Bloomberg reports.

A surge in wholesale gas prices and Russian supply cuts have triggered millions of losses, prompting Berlin to step in with a rescue package in July that gave it a 30pc stake.

According to the report, Chancellor Olaf Scholz is ready to inject more capital and increase the Government's stake above 30pc.

A full nationalisation – which would required an agreement with Uniper's Finnish parent company Fortum ~ is also being discussed.

10:10 AM

Pound pushes higher as inflation falls

After a hesitant start to the day, sterling is now on the front foot after data showed inflation fell for the first time in a year last month.

The pound rose 0.5pc to $1.1546, pulling away from its 37-year low hit last week. Against the euro, it rose 0.2pc to 86.59p.

The pound is still down sharply this year, however, as it struggles with surging inflation, a looming recession and uncertainty over Liz Truss's tax cut plans.

09:50 AM

Truss told to increase earthquake limits to kickstart fracking revolution

Liz Truss is being urged to relax the limits on earthquakes caused by fracking as part of plans to kickstart an energy revolution, writes Matt Oliver.

The Prime Minister is already poised to end the moratorium on fracking within days in a bid to make Britain energy independent by 2040.

But companies say this alone will not be enough to unlock Britain’s potentially vast shale gas reserves. The Telegraph understands fracking businesses are lobbying for the limits on seismic activity to be substantially increased to help kickstart the industry.

Current rules require drilling to stop if it causes tremors of 0.5 or more on the Richter scale.

Experts say tremors at this level occur naturally and often, at a magnitude so low it is imperceptible to people above ground. The current limit blocks any realistic possibility of exploiting shale resources commercially.

Fracking companies want parity with other industries, for example geothermal energy, which is allowed to create earthquakes of higher magnitudes than 0.5. In the US, fracking-related tremors of up to 4-magnitude are allowed.

Read Matt's full story here

09:25 AM

Naked Wines tumbles after shock boardroom exit

Naked Wines - Naked Wines © Naked Wines Naked Wines - Naked Wines

Naked Wines has lost almost a third of its value in early trading after announcing the shock departure of a non-executive director.

The online wine seller last night announced that Pratham Ravi, the largest shareholder who joined less than three weeks ago, was stepping down with immediate effect.

Analysts at Liberum said the abrupt departure suggested "something has gone somewhat awry".

They also pointed to the firm's weak balance sheet and question marks around its business, saying a trading update next month "could be rather negative".

Shares tumbled 32pc.

09:06 AM

EU imposes price caps and windfall taxes to tackle energy crisis

The EU has outlined plans to cap revenues from low-cost electricity generators and impose a windfall tax on fossil fuel firms as it grapples with the escalating energy crisis.

Ursula von der Leyen, European Commission President: "In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers.

"In these times, profits must be shared and channelled to those who need it most."

The EU chief said the bloc was also discussing energy price caps and working to establish a "more representative benchmark" price for gas than the Dutch Title Transfer Facility (TTF), where prices have rocketed higher.

08:52 AM

Dunelm profits soar but it warns on outlook

Dunelm homewares profits - REUTERS/Peter Cziborra/File Photo/File Photo © REUTERS/Peter Cziborra/File Photo/File Photo Dunelm homewares profits - REUTERS/Peter Cziborra/File Photo/File Photo

Dunelm said its profits jumped nearly a third to a new record, but warned the wider economic backdrop was "extremely challenging".

The homewares retailer reported pre-tax profits of £209m over the year, up from £157.8m the previous year. Shares rise more than 4pc.

Dunelm said sales had remained "robust" in the first 10 weeks of the new year, although they were lower than a year earlier when trading was boosted by a delayed summer sale and the post-lockdown reopening.

But its costs have been soaring, with inflationary pressures – mainly on staff wages – adding another £17m to its annual operating expenses, and the retailer said it would "continue to relentlessly focus on making every pound count".

It stuck by forecasts for the new financial year in spite of the gloomier consumer spending outlook and cost woes.

Nick Wilkinson, chief executive of Dunelm, said:

We feel confident and well prepared to weather the current economic pressures – we emerged from an unprecedented global pandemic as a bigger, better business and we believe we have the tools in place to do that again.

That said, the operating and economic environment is extremely challenging.

In this environment, we have to make every pound count, both for ourselves through our tight operational grip and cost discipline, and for our customers, through our offer of outstanding value at all price points.

08:39 AM

FTSE risers and fallers

The FTSE 100 has fallen further this morning as a fall in inflation did little to ease concerns about further interest rate rises.

The blue-chip index was down 0.8pc, deepening its declines after a sharp fall yesterday.

Oil and mining stocks were the biggest drag, as traders feared further rate rises by the Federal Reserve could dampen global demand and slow the global economy.

Croda International was one of the few risers, gaining 2.6pc after a ratings upgrade by analysts at Jefferies.

The domestically-focused FTSE 250 fell 0.7pc. Dunelm rose more than 4pc after the furniture retailer posted a record profit.

08:17 AM

Signs of easing prices to comes

While inflation cooled off a little in August, it's still just shy of its 40-year high.

However, there is some cause for optimism. While economists don't think inflation has peaked just yet, there are signs prices will ease later in the year.

The producer price index, which measures inflation before it reaches consumers, stood at 20.5pc in August, down from 22.6pc the previous month.

The energy bills support announced by Prime Minister Liz Truss next week is also expected to bring down prices later in the year.

08:06 AM

IoD: Home-grown inflationary pressures are worrying

Kitty Ussher, chief economist at the Institute of Directors, says the Bank of England will be worried about domestic price rises.

This is the first time that the inflation rate has fallen since September last year, and will be reassuring to businesses for whom ever-rising headline rates are a driving factor behind an overall lack of confidence in the UK economy.

However, the fact that the falling headline rate is due to changes in the price of petrol and diesel, which is driven predominantly by the international price of oil rather than by domestic factors, means today’s news is unlikely to alter expectations of a rise in interest rates when the Bank of England meets next week.

In fact, the inflation rate for locally-produced products and services such as dairy and personal care items continued to rise in August; it is home-grown inflationary pressures such as these that are the main concern of the Bank of England.

08:02 AM

FTSE 100 opens lower

The FTSE 100 has opened in the red, deepening its losses after yesterday's sharp sell-off.

The blue-chip index fell 0.5pc to 7,346 points.

07:54 AM

Chart: Inflation eases for first time in a year

07:46 AM

Inflation remains stubbornly high

Inflation has fallen for the first time in just under a year, but it still remains high. Here's our economics editor Szu Ping Chan with a bit more detail:

The ONS said a fall in petrol and diesel prices drove the first downward move in inflation since September 2021.

Yael Selfin, an economist at KPMG, said measures introduced by the Prime Minister to cap average household bills at £2,500 could see inflation peak at a "more modest 10.5pc" in October, compared with a much bigger peak at the turn of the year.

However, food price rises remain stubbornly high. Average prices at the supermarket checkout are 13.4pc higher than a year ago, with many diary items up by a third.

Milk, cheese and egg prices are up 22.1pc compared with a year ago, with low-fat milk up 40pc.

Butter prices have risen 29.5pc, while the cost of a bag of flour is up by an average of 28pc.

Meat prices are also up sharply, with lamb and chicken costs climbing 18pc.

Near double digit inflation also reflected higher travel costs. Plane tickets are 40pc higher than a year ago, the ONS said, reflecting higher demand and soaring fuel costs.

Among the few items that have fallen in price compared with a year ago include TVs, PCs and other recording equipment, while camping equipment, board games and books were also on average cheaper than a year ago.

07:36 AM

Pound reverses gains as inflation cools

Sterling has erased its gains from earlier this morning after the latest inflation figures came in below expectations.

The pound suffered a sharp tumble against a strengthening dollar yesterday after US inflation topped forecasts. It had started to recover slightly in overnight trading.

But it's back on the back foot again now, falling as much as 0.3pc against the dollar to $1.1482. It dipped 0.1pc against the euro to 86.79p.

07:31 AM

Capital Economics: Inflation hasn't peaked yet

Despite the fall in inflation, Paul Dales, chief UK economist at Capital Economics, pours could water on hopes that price rises have peaked.

The easing in CPI inflation from 10.1pc in July to 9.9pc in August is a bit of a relief after yesterday’s US CPI shocker, but overall and core UK CPI inflation haven’t peaked yet. As such, the Bank of England will have to continue turning the screws.

A further rise in food price inflation, from 12.8pc in July to 13.4pc in August, and an increase in clothing price inflation, from 6.9pc to 7.9pc, offset some of the drag on CPI inflation in August from fuel.

But we’re more concerned by the continued upward momentum in services inflation, which rose from 5.7pc to 5.9pc. That’s why core CPI inflation stayed at a 30-year high of 6.3pc.

Services inflation is being driven by the tight labour market and strong wage growth, which has shown little sign of abating yet.

Overall, we think CPI inflation will peak around 11pc just before the end of the year and that core inflation will continue to edge higher too. That means the Bank will have to continue raising interest rates, from 1.75pc now to 3pc if not higher.

07:26 AM

Falling fuel prices bring down inflation

The latest figures show a decline in fuel prices is the biggest factor behind last month's fall in inflation.

Fuel and raw material costs declined 1.2pc, driven by cheaper wholesale oil prices, and factories cut their prices by 0.1pc.

Prices were still up sharply from a year ago, however.

ONS fuel prices CPI - ONS © ONS ONS fuel prices CPI - ONS

07:16 AM

Inflation eases slightly in August

Good morning. 

There's some much-needed good news this morning as UK inflation eased back slightly in August.

The consumer prices index cooled to 9.9pc last month, according to the ONS. That's down from 10.1pc in July, though it's still not far off the highest level in 40 years.

The figure will offer some relief to the Bank of England, which will announce its decision on interest rates next week as it tackles stubbornly high inflation.

Price rises still remain embedded in the economy, though Prime Minister Liz Truss's energy bills support could offer further relief later in the year.

5 things to start your day 

1)  Unemployment at lowest since 1974 as NHS backlog drives ‘alarming’ exodusA sharp rise in long-term sickness drives unemployment to its lowest level since 1974 as the labour market shrinks

2)  New York Times staff refuse to come back to the office - Over 1,200 members of staff are rebelling against the newspaper

3)  Hawksmoor criticises pressure to close on day of Queen Elizabeth II’s funeralHost of businesses announce they are shutting as a sign of respect

4)  Port strikes deal fresh blow to Britain’s fragile supply chains - Workers at two of UK’s biggest ports will stage up to two weeks of walkouts later this month over a pay dispute

5) Deloitte plans to hire 1,000 employees outside of London - Big Four firm joins rush of accounting networks expanding beyond the capital

What happened overnight 

Asian shares tumbled, the dollar held firm and the US yield curve was deeply inverted on Wednesday, as a white-hot US inflation report dashed hopes for a peak in inflation and fuelled bets that interest rates may have to be raised higher and for longer.

Wall Street saw its steepest fall in two years, the safe-haven dollar posted its biggest jump since early 2020, and two-year Treasury yields jumped to the highest level in 15 years.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3pc in early Asian trade on Wednesday. Resources-heavy Australia plunged 2.8pc, while Japan's Nikkei tumbled 2.7pc.

Both S&P 500 futures and Nasdaq futures rose 0.1pc, after a heavy sell-off. The Dow Jones Industrial Average plunged 3.94pc, the S&P 500 lost 4.2pc, and the Nasdaq Composite dropped 5.16pc.

Coming up today

Corporate: Dunelm, Redrow (full-year), Tullow Oil (interim) 

Economics: Consumer price index (UK), producer price index (UK, US), retail price index (UK), industrial production (EU) 

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