Energy price cap adjustments could be reviewed every three months under Ofgem reform plan

(qlmbusinessnews.com via news.sky.com– Mon, 16th May 2022) London, Uk –

The energy price cap, the mechanism that determines gas and electricity bills for 22 million households, could soon be reviewed every three months under plans announced by the industry regulator.

Ofgem revealed that it was putting the idea out to consultation after criticism that the present twice-yearly adjustment arrangement – in April and October – had contributed to the failure of suppliers last year at the height of the wholesale gas price shock.

The cap, which was credited with shielding families from the worst of the COVID-linked rises in raw energy costs, prevented companies passing on the unprecedented increases to their customers.

It delayed the impact from the most damaging element of the cost of living crisis as households were forced to swallow unprecedented rises in one go, with the average bill rising by 54%, or £693 annually, from April to £1,971.

Thelatest forecasts suggest bills could rise to almost £2,600 in October when the next price cap adjustment is due – reflecting the impact of Russia's war in Ukraine for the first time.

Ofgem said its proposals would enable greater agility: allowing bills to rise or decline more quickly but its chief executive admitted during an interview with Sky News that the next movement would be upwards.

“A more frequent price cap would reflect the most up to date and accurate energy prices and mean when prices fall from the current record highs, customers would see the benefit much sooner,” the regulator said in its statement.

“This change would also help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for consumers.”

It has previously admitted that this proposal would have meant prices going up before the recent April rise but the consultation means that no cap adjustment is imminent.

‘More help is coming', says minister

Ofgem said it planned to bring in the changes from October, so households would see no impact from an update until 1 January under the plans.

They also include an effort to ensure that consumers are able to reap the benefits of falling gas prices more quickly, Ofgem added.

The regulator said: “This is all part of a range of plans to make the market fairer and more resilient, such as stress tests for suppliers and a more robust scrutiny of supplier business plans.

“Ofgem also recently wrote to suppliers to alert them to a series of market compliance reviews to ensure, amongst other things, that they are handling direct debits fairly, and that overall, they are held to higher standards for performance on customer service and protecting vulnerable customers.”

It argued that the cap change should reduce the risk of costs related to supplier failures landing at the feet of bill-payers.

Ofgem chief executive Jonathan Brearley told Sky News it would also mean that bills could go up quicker, but they would also fall more rapidly in reaction to wholesale price shifts.

“Remember that the total cost you pay over the year would be absolutely the same, because that reflects only the cost of the energy that we buy.

“Yes, the price would go up more quickly as prices go up, but equally importantly as those prices come down, then the price cap comes back down again.

“I remember back in the 2010s when people saw their prices go up and were waiting and wondering why prices didn't come down equally quickly.

“The good thing about the price cap is that we will make sure it only reflects costs, and therefore it only reflects what you need to pay for your energy.”

He added: “With the Russian invasion of Ukraine, we are seeing a sustained increase, a further increase, in gas prices. So, the difficult news I have is that it is likely in October that prices will go up again.”

The energy price cap is the largest single driver of UK inflation, which is tipped by economists to take a leap forwards this week when the figures for April are released.

The price cap surge means the consumer prices index measure could exceed 9% – a 40-year high according to forecasts – from the current 7%.

The Bank of England warned this month that the impact of the growing cost of living crisis risked the UK entering recession by the year's end, with inflation topping 10%.

The promise of a slump in living standards has prompted calls from business, oppositions parties and unions for an emergency budget.

Boris Johnson promised action within “days” last week but there has been little sign that Rishi Sunak is preparing for further, targeted, support imminently.

The chancellor has refused to rule out the idea of windfall taxes on energy companies contributing to any further taxpayer aid.

By James Sillars

British Gas to take on 500 staff to help customers facing soaring bills

(qlmbusinessnews.com via theguardian.com – – Tue, 10th May 2022) London, Uk – –

Company to beef up energy support fund as owner Centrica says profits will hit top end of City forecasts

British Gas is to beef up its customer services team to deal with the sharp rise in the number of distressed customers who are struggling to cope with soaring bills, as its owner, Centrica, predicted annual profits will hit the top end of expectations.

The company is to recruit another 500 people to field calls from the growing number of people who are facing higher energy bills at a time when the wider cost of living is outpacing wage growth, piling pressure on household budgets.

A spokesperson for Centrica said demand for customer services had been “phenomenal” over the past year. “We’re taking on extra employees to manage that demand,” they said. “Customers are very concerned about rising energy costs and we want to help them as much as we can.”

The average household dual fuel tariff jumped to just under £2,000 a year on 1 April, when the UK’s energy regulator raised the price cap by 54% to reflect sky-high wholesale gas prices. Bills are poised to rise further at the next energy price cap review in October.

Centrica said in a trading statement on Tuesday that it expected 2022 operating profits to come at the top end of City forecasts, which range from £739m to £1.4bn.

The chancellor, Rishi Sunak, has been heavily criticised for not doing enough to help low-income households, and calls for a windfall tax on energy producers such as BP and Shell have intensified after they made billions in profits on the back of higher oil and gas prices.

Centrica has also beefed up the British Gas energy support fund, set up in December, which has tripled in value since then to £6m. It provides grants of up to £750 to help vulnerable customers pay their energy bills.

The fund has paid out £1.9m to 3,600 customers so far, equating to an average grant of £534. A further £1.6m of grants is pending.

Centrica will create a further 1,000 engineering apprenticeships after 500 were set up last year, with the goal of taking on 3,500 over the next decade.

It said supply chain disruption, with global delays to shipments of some parts, and higher inflation was affecting the British Gas services arm. However, its British nuclear and gas production business is performing strongly, and the company has secured more supplies of gas from Norway and renewable energy – mainly wind and solar – from across Europe and within the UK.

By Julia Kollewe

Scottish Power boss urges £1,000 bill cut for 10 million

(qlmbusinessnews.com via bbc.co.uk – – Mon 9th May 2022) London, Uk – –

The boss of Scottish Power has warned that millions of customers face an horrific winter unless there is a major government intervention in energy firms.

Keith Anderson, chief executive of Scottish Power, told the BBC that another expected rise in energy bills in October to between £2,500 and £3,000 a year could see huge losses for suppliers and many customers unable to pay their bills.

He warned regulator Ofgem that setting the new price cap too low could risk suppliers collapsing or the foreign owned firms leaving the market.

Mr Anderson has put some flesh on the bones of a plan he first mentioned in a frank exchange with a committee of MPs three weeks ago.

He has called for ten million households to have their energy bills reduced by £1,000 this October.

He said the government's plan to give each household £200 towards their energy bill – a sum that will need to be paid back – would not be enough.

“We need to be realistic about the gravity of the situation – around 40% of UK households, potentially 10 million homes, could be in fuel poverty this winter,” Mr Anderson explained.

The price cap is set to be increased again in October.

To date, the government has said it will offer extra relief of £150 in April via the council tax system in England, and in October customers in England, Scotland and Wales will receive a £200 rebate on their energy bills.

They will have to repay this at £40 a year for five years, starting in April 2023.

However, Mr Anderson said a £10bn tariff reduction fund could be paid for by adding £40 annually to all household energy bills for the next decade. He said this would be the most effective to avoid fuel poverty for the most vulnerable.

Mr Anderson said that such a fund would directly tackle the biggest cause of the cost of living crisis in a way that other measures – such as the recent 5p cut to fuel duty or a possible cut to the frequency of MOT testing – do not.

Households on pre-payment meters and those in receipt of benefits would be eligible for the discount.

Mr Anderson also said more energy companies could collapse if their customers were unable to pay their bills.

Scottish Power is owned by Spanish firm Iberdrola and Mr Anderson fears that foreign owned energy suppliers – including EDF, Eon and his own – might struggle to persuade their parent companies to continue to subsidise loss-making UK subsidiaries and exit the UK market.

Warning to Ofgem

Scottish Power is also concerned that energy companies will sustain further big losses if Ofgem sets the new energy price cap – due to take effect in October – too low.

Wholesale gas prices have fallen sharply since the all time records set in March.

However, many energy companies bought the gas they will supply this winter at prices much higher than current levels.

If Ofgem does not recognise this when it sets the new cap, some firms will have to sell at a significant loss threatening them with further distress or collapse which would further destabilise the market, according to Scottish Power.

“We need to find a way to help to those that need it in time for winter in a way that doesn't exacerbate the issues we've already seen in the industry with supplier failures and very real concerns about billpayers running up unsustainable debts,” Mr Anderson continued.

Energy suppliers concede that further government support would help them as well as their customers.

Meanwhile, government officials privately say that it is hard to distinguish between genuine potential financial distress for the energy companies and intense lobbying.

Ofgem responded that it is “too soon” to predict the level of the price cap from October. However, it said that new measures earlier this year will allow it in “exceptional circumstances”, to update the price cap more frequently than once every six months, to “ensure that the price cap continues to reflect the true cost of supplying energy”.

“This was introduced in the interests of stabilising the market and making sure both consumers and suppliers pay a fair price,” Ofgem added.

The Treasury has said it is monitoring the situation and would review the level of support needed when the level of the new price cap became clear in late summer.

By Simon Jack

 

Federal Reserve announce sharpest rise in interest rates in over 20 years

(qlmbusinessnews.com via theguardian.com – – Thur, 5th May 2022) London, Uk – –

Benchmark interest rate raised 0.5 percentage points, with more rises expected

The Federal Reserve moved to tamp down soaring inflation in the US on Wednesday, announcing the sharpest rise in interest rates in over 20 years.

The Fed’s benchmark interest rate was raised by 0.5 percentage points to a target rate range of between 0.75% and 1%. The hike is the largest since 2000 and follows a 0.25 percentage point increase in March, the first increase since December 2018.

More rate rises are expected. The Economist Intelligence Unit expects the Fed to raise rates seven times in 2022, reaching 2.9% in early 2023. Starting in June, officials also plan to shrink their $9tn asset portfolio, a policy move that will further push up borrowing costs.

In a statement the Fed said that although “overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong”. But it warned that inflation “remains elevated”, the invasion of Ukraine had implications for the US economy that remain “highly uncertain” and Covid-related lockdowns in China “are likely to exacerbate supply chain disruptions”.

Rates were cut to near zero in March 2020 when the pandemic hit the US but they were already low and years of low rates left the US and other countries ill-prepared for a sudden rise in inflation. Until recently the Fed had dismissed rising prices as “transitory” and expected them to fall as economies recovered from the pandemic.

All that has now changed. The Fed chair, Jerome Powell, took the unusual step of addressing the American people at the start of a press conference following the rate hike announcement. “Inflation is much too high, and we understand the hardship it is causing. We are moving expeditiously to bring it back down,” he said.

“Some of us are old enough to have lived through high inflation and many aren’t. But it’s very unpleasant … If you are a normal economic person, then you probably don’t have that much extra to spend, and it’s immediately hitting your spending on groceries, on gasoline, on energy, things like that. We understand the pain involved.”

Thanks in large part to the unprecedented impact of the coronavirus on the global economy, inflation is now running at a 40-year high in the US. In March, the Consumer Price Index (CPI) was 8.5% higher than it was a year ago, driven up by rising prices for gasoline, shelter, and food. The increasing costs of essential goods and services are now outstripping average wage gains.

Ahead of the announcement Jamie Dimon, JP Morgan Chase chief executive officer, warned that the Fed may have waited too long to raise rates. “We’re a little late,” he told Bloomberg. “The sooner they move the better.”

The impact of the Fed’s policy is already being felt in the wider economy. Since the start of the year, mortgage rates have climbed at their fastest pace in decades, rising nearly two percentage points. Some hot property markets have started to cool as a result. The impact of tighter monetary policy has also triggered selloffs in the stock markets.

Powell said the economy remained strong and that he was confident the Fed could act without triggering a recession but he warned it would act aggressively to tackle inflation.

“We need to do everything we can to restore stable prices,” he said. “We will do it as quickly and effectively as we can. We think we have a good chance to do it without significant increase in unemployment or sharp slowdown. But ultimately, we think about the medium and longer term, and everyone will be better off if we can get this job done – the sooner, the better.”

By Dominic Rushe

Why Diesel Is Driving Up The Cost Of Everything


Source: CNBC

Diesel prices reached all-time highs in March of 2022. Gasoline prices may hit consumers directly, but diesel prices are driving up the costs of all kinds of goods. They are also hurting the trucking industry, which is dominated by small businesses.

Consumers notice spiking gasoline prices every time they drive to the pump. But energy industry analysts say the current spike in diesel prices is historic — and is pushing up the cost of all kinds of goods. Diesel prices are hovering around all-time highs, forced upward by the same circumstances that have fueled gasoline’s rise.

“The price of diesel is probably the bigger headline here,” said Patrick De Haan, head of petroleum analysis for GasBuddy. Nearly everything people buy is at some point freighted in a vehicle powered by a diesel engine. Ships and barges, trains, trucks and even some airplanes run on diesel fuel.

Will The U.S. Face A Food Shortage?

Source: CNBC

The war between Russia and Ukraine is putting a massive strain on the global food supply. Food prices in the U.S. soared to record heights along with other commodities like wheat, corn and fertilizers. So how exactly does the conflict in Ukraine pose a threat to the global food supply and can anything be done to stop it? Watch the video find out.

The war in Ukraine is putting a massive strain on the global food supply. Ukrainian grain exports last month were a quarter what they were in February. Also as a direct result of the Russian invasion, the cost of fertilizers, with prices soaring for raw materials like ammonia, nitrogen, and nitrates, are up 30% since the start of 2022.

“This is going to be another major test of the food supply system,” said Diane Charlton, assistant professor of agricultural economics at Montana State University. “We will have to watch very carefully what’s happening in other parts of the world and consider ways to reduce risks of food shortages and conflict.” Meanwhile, food prices in the U.S. are rising at historic rates, while prices for commodities like wheat and corn are at their highest levels in a decade.

What’s more, the U.S. Department of Agriculture predicts that food-at-home prices will see an increase of up to 4% by the end of 2022.

Rishi Sunak hints at U-turn on UK oil and gas windfall tax

(qlmbusinessnews.com via theguardian.com – – Thur, 28th April 2022) London, Uk – –

The chancellor says nothing is off the table but fellow Tory ministers remain dismissive of idea.

Rishi Sunak has opened the door to a windfall tax on oil and gas companies despite previously dismissing the policy, as Labour accused the government of burying its head in the sand over spiralling bills.

The chancellor hinted at a possible U-turn on a tax on oil and gas providers, having repeatedly refused to countenance the idea in the past when suggested by Labour and the Liberal Democrats.

It comes as Keir Starmer branded Boris Johnson the “Comical Ali of the cost of living crisis”, suggesting the government was in denial about the financial pressures facing households and bereft of new ideas.

Speaking to Mumsnet, Sunak said he had not gone down the road of a windfall tax because he did not want to put off investment in new oil and gas extraction, highlighting a recent £25bn investment by one company in the North Sea.

But he added: “What I would say is that if we don’t see that type of investment coming forward and companies are not going to make those investments in our country and energy security, then of course that’s something I would look at and nothing is ever off the table in these things.”

Hours earlier, Dominic Raab had dismissed the idea of a windfall tax as “disastrous” and “damaging”, while Boris Johnson rejected it at Wednesday’s prime minister’s questions as a “tax on business”.

However, the Tories are coming under intense pressure over their lack of ideas on how to deal with inflation running at more than 7% and energy bills soaring even higher.

Johnson held a brainstorming cabinet meeting on Tuesday where ministers suggested relaxing rules on how many children can be cared for by nursery staff and allowing less frequent MOTs to help people save money.

But the ideas were criticised as inadequate by Labour, while Torsten Bell, the chief executive of the Resolution Foundation thinktank, said the government had “lost the plot” if it thought its ideas would make a substantial difference to people’s lives.

“Our problem is a big cost rise for almost everyone that is harder for low/middle-income households to bear. So the answer is either reducing that cost rise for, or raising the income of, those households. The benefits system is by far the easiest way to do that. Obviously,” he said.

Starmer made the comparison between Johnson and Comical Ali – the former Iraqi minister who gained cult status for his outrageous lies – during a fractious prime minister’s questions, with Starmer saying Johnson was complacent about people’s “blindingly obvious” economic problems.

The Labour leader said a mooted plan to let motorists get MOTs lasting two years instead of one made the ill-fated 1990s “cones hotline” look “visionary and inspirational”. He said Johnson was “only just waking up to the cost of living crisis” and had acted like an ostrich.

Johnson accused Starmer of “droning on” and dismissed his call for a windfall tax on oil and gas companies to help bring down people’s energy bills, saying: “This guy is doomed to be a permanent spectator.”

In their final public pitches before next week’s local elections, the two leaders traded blows during a session that was focused mainly on the economy. Starmer said the UK was on course to have the slowest growth and highest inflation in the G7, and he said Johnson was failing to properly manage the economy.

In a series of targeted questions designed to pin responsibility for the cost of living crisis on the government, Starmer said ministers were making life worse for working people with last month’s “tax-hiking budget” and by failing to help those whose fuel bills have spiralled. “They’re the party of excess profits, we’re the party of working people,” Starmer said.

He said his party would ask oil and gas companies to pay their fair share, insulate homes to get bills down and close tax avoidance schemes by scrapping non-dom status.

Johnson dismissed the windfall tax on offshore energy companies, saying it would “clobber the very businesses that we need to invest in energy to bring the prices down for people across this country.”

Spending in the North Sea is set to hit £21bn over the next five years, according to a report issued in September 2021 by UK oil trade body Offshore Energies UK, indicating a higher annual rate than the £3.7bn of investment reached in 2020.

Shell is considering a U-turn on a plan that would have seen it abandon the Cambo oilfield in UK waters, after it became emboldened by the improving political, regulatory and economic picture. It reconsidered after a bumper 2021, thanks to higher oil and gas prices that sent profits soaring to $19.3bn, compared with $4.85bn the year before.

The company said this month it planned to invest £20bn-£25bn in the UK energy system over the next decade, although 75% will be on offshore wind, hydrogen and electric vehicle infrastructure, rather than North Sea oilfields.

BP’s boss, Bernard Looney, declared the company a “cash machine” after profits swung to $12.8bn, compared to a loss of $5.7bn the year before. “We plan to continue to invest in the North Sea,” BP said in its latest annual report.

Sunak hinted at more help for people on energy bills in the autumn, but claimed it would be “silly” to support households now. “We’ll see what happens with the price cap in the autumn, I know people are anxious about this and wondering if they’re going to go up even more,” he said. “Depending on what happens to bills then, of course, if we need to act and provide support for people we will, I’ve always said that. But it would be silly to do that now.”

The comments drew criticism from Labour. Tulip Siddiq, a shadow Treasury minister, said the chancellor was “out of touch” as families were “already feeling the cost of living crisis, hit by record rises in energy prices, record high petrol prices and staggeringly steep hikes in the cost of food and essentials.”

By Rowena Mason, Aubrey Allegretti and Rob Davies

Russian energy giant Gazprom halts gas exports to Poland and Bulgaria

(qlmbusinessnews.com via bbc.co.uk – – Wed,27th April2022) London, Uk – –

Russian energy giant Gazprom says it has halted gas exports to Poland and Bulgaria over the countries' refusal to pay for supplies in roubles.

The firm said services will not be restored until payments are made in the Russian currency.

It comes after Russian President Vladimir Putin ordered “unfriendly” countries to pay for gas in roubles.

Poland confirmed supplies had stopped, but Bulgaria said it was still unclear whether supplies had been halted.

Countries pay in advance for their gas, but as they have gone to pay for future supplies, Russia has stood firm on its demand made last month that new purchases need to be paid in roubles.

The threat, in which Mr Putin said “existing contracts will be stopped”, has been seen as an attempt boost the rouble, which has been hit by Western sanctions.

Nathan Piper, head of oil and gas research at Investec, told the BBC the halting of supplies to Poland and Bulgaria was the “start of Russia exerting economic pressure on Europe,” and a move which could “escalate” with other EU nations.

Poland's deputy foreign minister said the country could cope without Gazprom's gas and had “taken some decisions many years ago to prepare for such a situation”.

Marcin Przdacz told the BBC there were “options to get the gas from other partners,” including the US and gulf nations.

“I'm pretty sure that we will manage to handle this,” he told the BBC.

Polish state gas company PGNiG, which bought 53% of its gas imports from Gazprom in the first quarter of this year, described the suspension as a breach of contract, adding that the company would take steps to reinstate the gas supply.

Meanwhile in Sofia, energy minister Alexander Nikolov said Bulgaria had paid for Russian gas deliveries for April and claimed supplier Gazprom will be in breach of its current contract if it halts the flow.

“Because all trade and legal obligations are being observed, it is clear that at the moment [Russian] natural gas is being used more as a political and economic weapon in the current war,” Mr Nikolov said.

Bulgaria, which relies on Gazprom for more than 90% of its gas supply, said it had taken steps to find alternative sources but no restrictions on gas consumption were currently required.

The executive director of Bulgarian gas network operator Bulgartransgaz said supplies to Bulgaria were still currently flowing.

Bulgaria also transports Russian gas via an extension of the Turk Stream pipeline to neighbouring Serbia and from there to Hungary. Hungary and Austria also said gas supplies were normal.

The Prime Minister of the Czech Republic, Petr Fiala, said the country has had no signals or information on any interruption to its gas supplies, but must be prepared for any scenario.

The central European country is almost entirely dependent on Russia for its gas.

Russia's top lawmaker said on Wednesday that gas giant Gazprom had made the right decision in suspending gas supplies to Bulgaria and Poland and said Moscow should do the same with other “unfriendly” countries.

“The same should be done with regard to other countries that are unfriendly to us,” Vyacheslav Volodin, the speaker of Russia's lower house of parliament, the Duma, wrote on his Telegram channel.

Ursula von der Leyen, president of the European Commission, said Russia was using gas “as an instrument of blackmail”.

“This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier,” she said.

Ms von der Leyen said the EU was “prepared for this scenario” and had been “working to ensure alternative deliveries and the best possible storage levels across the EU”.

Investec's Mr Piper told the BBC the halting of supplies to Poland and Bulgaria was the “start of Russia exerting economic pressure on Europe.”

He said despite demand for gas declining as Europe enters summer, “risks around Russian gas supply are keeping prices high, putting pressure on consumers and industry”.

The latest move by Russia sent European gas prices up further on Wednesday, surging by 24%.

Mr Putin's decree for gas payments means foreign buyers of Russian gas have to open an account at Russia's Gazprombank and transfer euros or US dollars into it.

Gazprombank would then convert this into roubles which will then be used to make the payment for gas.

UK Deputy Prime Minister Dominic Raab earlier told Sky News the decision to cut off gas supplies will have “a very damaging effect on Russia,” adding that such moves could lead to the country becoming “an economic pariah”.

Following Russia's announcement, Poland's climate ministry said the country's energy supplies were secure.

Climate Minister Anna Moskwa said there was no need to draw gas from reserves and gas to customers would not be cut.

Poland was already planning to stop importing Russian gas by the end of the year, when its long-term supply contract with Gazprom expires.

PGNiG said its underground gas storage was almost 80% full and, with summer approaching, demand was lower.

Poland also has alternative supply sources, including a liquefied natural gas (LNG) terminal in Swinoujscie.

On 1 May, a new gas pipeline connection with Lithuania is also due to open that will give Poland access to gas from Lithuania's LNG terminal.

And a new pipeline delivering gas from Norway, known as the “Baltic Pipe”, comes online in October. It should reach full capacity by the end of the year and could replace all Russian deliveries.

Supplies from Russia account for about 40% of the EU's natural gas imports.

However, many countries have pledged to move away from Russian energy in response to its invasion of Ukraine.

The US has declared a complete ban on Russian oil, gas and coal imports.

Meanwhile, the UK is to phase out Russian oil by the end of the year, with gas to follow as soon as possible, and the EU is reducing gas imports by two-thirds.

Primark owner blames soaring costs as it warns of rising price and increasing inflationary pressure

(qlmbusinessnews.com via theguardian.com – – Tue, 26th April 2022) London, Uk – –

ABF says its food brands, including Twinings, Kingsmill and Ryvita, also face inflationary pressures.

The owner of Primark has warned the clothing chain will have to raise prices on its autumn and winter ranges as it is no longer able to offset cost increases with savings.



Associated British Foods (ABF) said its food businesses, which include Twinings, Kingsmill and Ryvita, face increasing inflationary pressure in many areas including raw materials, commodities, energy and supply chain costs made worse by the war in Ukraine.

“We have not seen such a scale of inflation in our major markets in recent times,” the company said in its half-year statement issued on Tuesday.

UK shoppers stockpile cooking oil and other essentials as prices soar
Read more

ABF said it expected profit margins would be hit by more than expected at both Primark and its food businesses over the coming months and it did not expect a recovery until next year.



George Weston, the chief executive of ABF, said the group was taking measures to mitigate rising costs across the business but he added: Looking further ahead, inflationary pressures are such that we are unable to offset them all with cost savings, and so Primark will implement selective price increases across some of the autumn/winter stock. However, we are committed to ensuring our price leadership and everyday affordability, especially in this environment of greater economic uncertainty.”

The warning comes after Primark increased sales by 64% year on year to £3.5bn in the six months to 5 March, as it was able to keep nearly all its stores open throughout the period after a series of high street lockdowns around the world during the earlier stage of the pandemic.

Primark said it had rung up strong sales of luggage and holiday kit such as swimwear and sandals as its customers began travelling for holidays again. Health and beauty sales also recovered, with false eyelashes and nails performing particularly well from the revival of socialising. However, sales for the period remained 10% below those before the pandemic.

Despite rising cost pressures, operating profit margins returned to pre-Covid levels as shoppers flooded back to stores and it benefited from a favourable exchange rate with the dollar, which is used to pay many suppliers.

By Sarah Buttler

Whisky and visas could be part of a UK-India trade deal

 

(qlmbusinessnews.com via bbc.co.uk – – Fri, 22nd April 2022) London, Uk – –

Prime Minister Boris Johnson says he wants a free trade deal with India by the end of this year. But as he prepares to meet his Indian counterpart Narendra Modi, it's too soon to toast the prospects of a deal that may well prove hard to agree.

No other nation drinks as much whisky as India – which should have Scotland's world-famous industry celebrating. But each bottle of Scotch sold in India comes with a hefty price tag attached, thanks to tariffs of 150% on imported liquor. So currently the majority of whisky drunk in India is made within its borders. Scotch whisky accounts for just 2% of the market.

Do away with those tariffs, the Scotch Whisky Association says, and exports could rise by £1bn over five years.

It's not just whisky: India typically applies very high trade barriers – be it tariffs, quotas or restrictions on investment – to attempts to access its markets. Foreign cars attract tariffs of up to 100% for example. As a result the UK currently sells less to India, with its vast population, than it does to Belgium.

But that could be about to change. At the start of this year, the UK and India began talks with the aim of securing a trade deal by the end of 2022. The third round (with many more likely to come) starts next week.

The UK Trade Secretary Anne-Marie Trevelyan says such a deal would be a “golden opportunity” perhaps more than doubling total trade between India and the UK by 2035, an increase of around £28bn.

Australia and the UAE have recently struck deals with India, so hopes are riding high.

When it comes to these discussions, though, both India and the UK have wishlists – and they could prove to be big hurdles to reaching the finish line.

Britain would like more access to India's manufacturing and services sector, areas in which India has traditionally resisted foreign involvement. But trade economists suggest India may be reluctant to do away with the protection that trade barriers have provided for domestic industries and workers. Mr Modi may think of the workers distilling whisky within India's own borders and hesitate to tear down those tariffs.

If India does go ahead and lower those barriers, there'd have to be concessions in return. The UK might face pressure to allow Indian products, such as medicines into its market. And there may be calls to grant more visas to Indian workers.

Under the new post-Brexit points-based immigration regime, over 60,000 Indians received skilled-worker visas last year, around two-fifths of the total. Amitendu Palit from the National University of Singapore, who was previously at India's Ministry of Finance thinks the UK will need to go further, allowing more Indian professionals into the UK for longer periods of time.

Boris Johnson has himself been highlighting the role that issuing visas could play in filling UK skills shortages, suggesting he may be paving the way for expanding eligibility – but it is not clear how that will be received by voters. Immigration has proved a touchy issue, particularly since the 2016 Brexit referendum.

Is it worth the fuss? By the government's own calculations, a trade deal with India would add just 0.2% to the UK's income or GDP – and that's over the course of a decade, and only if there is a substantial reduction in trade barriers.

Given Prime Minister Modi's stance towards Putin's Russia in recent weeks – India has a stated policy of non-alignment over Ukraine – some are querying whether a trade deal is desirable at all.

But for the UK, the attraction is the future potential. By 2050 India may be the third largest global economy, with a booming middle class with vast disposable income to splash. Getting a larger slice of that could be a substantial post-Brexit win, particularly since a free trade deal with the US has remained elusive.

The first phase of trade talks are often the easy part. The trickiest stuff is left until the end. So it may be a while before the true scale of the challenge is clear.

Economists say an interim deal could be reached by the end of the year – if both sides are willing to make concessions. But a full deal by Christmas looks ambitious.

Perhaps in acknowledgement of the complexities, the Scotch Whisky Association has urged an “early harvest deal” calling for whisky tariffs to be dropped ahead of a full deal. It could be tempting to secure a few positive headlines and some good cheer, while negotiators continue to thrash out the fine print of trickier areas behind the scenes.

By Dharshini David

Prices rising at their fastest rate for 30 years drive by increase in petrol and diesel

(qlmbusinessnews.com via bbc.co.uk – – Wed, 13th April 2022) London, Uk – –

Prices are rising at their fastest rate for 30 years, driven by a sharp increase in petrol and diesel costs.

The UK inflation rate rose to 7% in the year to March, the highest rate since 1992 and up from 6.2% in February.

Prices are rising faster than wages and there is pressure on the government to do more to help those struggling.

The cost of living is expected to rise even further after the energy price cap was increased, driving up gas and electricity bills for millions.

Inflation is the rate at which prices rise. If a bottle of milk costs £1 and that rises by 5p, then milk inflation is 5%.

Fuel had amongst the biggest impact on the inflation rate, with average petrol prices rising by 12.6p per litre between February and March, the largest monthly rise since records began in 1990, the Office for National Statistics (ONS) said.

This compares with a rise of 3.5p per litre between the same months of 2021.

Diesel prices also rose by 18.8p per litre this year, compared with a rise of 3.5p per litre a year ago.

The rise in the inflation rate was higher than the 6.7% expected by analysts and was also driven up by furniture, restaurant and food prices.

The figures for March do not yet reflect the average 54% increase in energy bills that took place from 1 April when the energy price cap was raised.

Since late last year, prices have been rising fast as pandemic restrictions have been eased and firms face higher energy and shipping costs which they have passed on to consumers.

Russia's invasion of Ukraine is now adding to the pain, as the price of oil and other commodities climb higher.

Russia is one of the world's largest oil exporters and demand for oil from other producers has increased since the invasion, leading to higher prices.

Although the UK imports just 6% of its crude oil from Russia, it is still affected when global prices rise.

Ukraine and Russia are also the world's main suppliers of sunflower oil and the war has hit prices.

In the UK, the price of oils and fats for food increased by 7.2% in March, according to the ONS.

Andrew Selley, chief executive of BidFood, a wholesaler which supplies 45,000 caterers and food service businesses across the UK, said increasing electricity, fuel and packaging costs were impacting the price of all its products.

But he told the BBC products affected by the war in Ukraine, such as wheat-based foods, sunflower oil, chicken and white fish, were particularly hard hit.

“I've been in the business for over 30 years. I've never seen a situation where everything seems to be going up [in price],” he said, adding that some of these costs would ultimately be passed on to consumers.

‘I'm paying £120 more a month for petrol'

Sara Gerritsma, a student from Leicestershire with a partner and six year-old child, said she may have to give up her paramedic degree due to the rising cost of fuel.

The 32-year-old only started the three-year course in October but she has a 2.5 hour roundtrip each day to get to university in Northampton, and her petrol costs have shot up by about £120 a month.

“It would be really frustrating giving up my course. It was a big decision changing my career at 32,” Sara told the BBC.

“But recently we have sat down and gone through everything and thought, can I afford to be a full-time student?”

Sara said the family was also using less energy and has reworked its food budget to save money.

The sharp rise in prices is also putting pressure on businesses.

Paul White, who owns the pizzeria 6/CUT in Eccles, Greater Manchester, said the increase in the minimum wage, the end of VAT relief, and rising fuel and food prices have all hit his company. The restaurant is also spending £500 more a week on its energy bills.

“We need to find an extra £1,400 a week to cover the costs of everything that's come on in the last few weeks,” he told the BBC .

He says he will have to put up prices, and is looking to charge each customer about 50p to £1 extra to cover his rising overheads.

But he is also worried people might start eating out less as their budgets are squeezed.

“Next six months there'll be a lot of [restaurants] shutting down, they won't be making enough money to cover the costs of everything,” he said.

Analysis: Kevin Peachey

This is no longer a cost of living squeeze, but a financial throttling for many people. Price rises are accelerating and their wages, benefits and pensions are failing to keep pace.

So, at home, families will be discussing how best to cope with this situation, which is expected to last a while.

In the words of the ONS, there were “no large offsetting downward contributions” to the inflation rate. In other words, nothing is getting significantly cheaper.

So avoidance of price rises is impossible. Even if you do not have a car and are avoiding surging fuel costs, lots of other necessities are getting more expensive.

Experts say the only option is trying to budget as best we can, across every part of our lives. Most importantly, they also stress the importance of seeking early, and free, help before falling into unmanageable debt.

Jack Leslie, senior economist at the Resolution Foundation think tank, which focuses on those on lower incomes, warned the cost of living crisis would “continue to worsen before it starts to ease at some point next year”.

He said with wages not keeping pace with rising prices, people were facing “the biggest squeeze since the mid-70s.”

Chancellor Rishi Sunak said: “I know this is a worrying time for many families, which is why we are taking action to ease the burdens by providing support worth around £22bn in this financial year, including for the most vulnerable through our Household Support fund.”

But Labour called on the chancellor to “show the leadership the country needs”.

“Labour has a plan to cut energy bills through a one-off windfall tax on oil and gas producer profits. Meanwhile, the chancellor has increased taxes for working people to their highest levels in 70 years,” shadow chief secretary to the Treasury Pat McFadden said.

Liberal Democrats leader Ed Davey called for “unfair tax hikes” to be immediately reversed and said people needed “urgent help” with energy bills.

Homebuilders agree to put £2bn towards fixing unsafe cladding on high rises in England

(qlmbusinessnews.com via theguardian.com – – Wed, 13th April 2022) London, Uk – –

Michael Gove announces deal involving 35 firms but further £3bn still needed to fully address fire safety issues

More than 35 homebuilders have agreed to put £2bn towards fixing unsafe cladding on high-rise buildings in England identified in the aftermath of the Grenfell Tower disaster, Michael Gove, the housing secretary, has said.

The move had been expected after Gove asked 53 homebuilders to contribute towards fixing buildings they have had a role in developing. More than 35 said they would commit £2bn, but that still leaves a further £3bn needed to address fire safety problems in high-rise buildings across the country.

Gove said the further £3bn would be raised by an extension to the building safety levy, forcing industry to pay for the remedial work on buildings where the developer cannot be traced or forced to pay up. This will be paid by developers applying for building control approval for higher-risk residential buildings in England.

Gove called on companies yet to sign up to the voluntary pledge to do so, saying they would face the consequences if they do not.

The government is introducing new powers that would allow the housing secretary to block those who refuse to make the commitment from building and selling new homes. The proposed laws, announced in February under the building safety bill, are also intended to make sure leaseholders have a cap on the costs of historical building safety defects.

Gove said: “Today marks a significant step towards protecting innocent leaseholders and ensuring those responsible pay to solve the crisis they helped to cause. I welcome the move by many of the largest developers to do the right thing.

“But this is just the beginning. We will do whatever it takes to hold industry to account, and under our new measures there will be nowhere to hide.”

By Rowena Mason 

Energy giant Ineos makes written request to UK government to develop fracking test site

(qlmbusinessnews.com via bbc.co.uk – – Mon, 11th April 2022) London, Uk – –

Energy firm Ineos says it wants to build a fracking test site to show the process can be performed safely.

The company claimed extracting shale gas in the UK could make the country “self-sufficient in 10 years”.

The firm has written to the government asking to develop a site, with its boss Sir Jim Ratcliffe saying such a move would “reduce the cost of energy” and ensure “long-term energy independence”.

The offer comes after the government ordered a new report into fracking.

Last week, it announced the UK's new energy strategy, which included plans to have more nuclear reactors, wind farms and solar energy production.

However, the government's strategy made no mention of fracking, a method of extracting gas and oil from shale rock.

Fracking involves drilling into the earth and directing a high-pressure mixture of water, sand and chemicals at a rock layer in order to release the gas inside.

The technique was halted in the UK in 2019 amid opposition from green groups and concerns over earth tremors, but there have been calls to rethink the ban, given the recent rise in the cost of energy.

Sir Jim, the founder and chairman of Ineos, said that with the UK in the “midst of an energy crisis”, it was a “ridiculous situation with so much gas under our feet”.

He said extracting shale gas would allow “the UK to benefit from its own resources, massively reduce the cost of energy and ensure our long-term energy independence”.

“We are today offering to drill a shale test site to show that a competent operator can be trusted to develop the technology safely,” he added.

Ineos said while it was invested in what it called the “growing renewables revolution”, the technology was not yet reliable enough to take over.

The company said the UK would need gas for three decades as it moves completely away from burning fossil fuels.

“Fracking has been safely used in the oil and gas industry for over 50 years. In the US, over one million wells have been safely used and have transformed the energy security of the country,” Ineos said.

The UK met 48% of its gas demand from domestic supplies in 2020, and bought the rest on international markets, according to the Department for Business, Energy and Industrial Strategy.

Russia's invasion of Ukraine has led to many countries, particularly European Union members who rely heavily on Russian gas and oil, considering where they get their supplies of energy from.

Ineos's call for a fracking test site comes after the boss of British Gas owner Centrica said the process could boost UK energy supplies and reduce bills.

Chris O'Shea said there needed to be an “informed debate” about it.

Some senior Conservatives have also called for a rethink on fracking amid concerns over security of access and rising energy prices.

However, environmental group Greenpeace has said there has been “a decade of hype and bluster” around shale gas.

Previously, Greenpeace said that fracking would not improve energy security, because any gas extracted would belong to the gas firm doing the drilling, not to Britain, and it would be sold on international markets.

Many environmental groups have said they are concerned about the potential for fracking to cause earthquakes.

At Cuadrilla's site in Lancashire, more than 120 small tremors were recorded while it was drilling.

Sir Jim said Ineos would invite government inspectors to monitor any potential test site.

“If at any stage the science shows there are problems, we will stop and make good the site,” he said.

“But if, as we believe, the opposite is true, we would ask that the government looks again at shale gas which would allow the UK to benefit from its own resources, massively reduce the cost of energy and ensure our long-term energy independence.”

By Michael Race

Why The U.S. Dollar May Be In Danger as its Share in The World’s Reserve Continues to Decline

Source: CNBC

The U.S. dollar is the most powerful currency that exists today. Yet, analysts have been warning the dollar’s impending doom since its original rise to prominence in 1971. As its share in the world’s reserve continues to decline, some experts worry that the dollar’s dominance may be under threat. So what would happen if the dollar were to lose its global reserve currency status? Watch the video find out.

UK set out plans to expand nuclear and offshore wind power

(qlmbusinessnews.com via uk.reuters.com — Thur, 7th April 2022) London, UK —

Britain set out plans to expand nuclear and offshore wind power on Thursday to bolster its energy independence, but a failure to target improved energy efficiency even as heating costs surge was attacked for lacking ambition.

With energy prices hitting record highs this year, driven in part by Russia's invasion of Ukraine, Britain set targets to increase wind, nuclear and solar generation, while supporting domestic production of oil and gas.

But options that could have delivered a more immediate impact, such as targets to expand onshore wind and improve home insulation, were lacking.

E.ON (EONGn.DE) UK chief Michael Lewis said a failure to include measures to help people reduce energy use and insulate homes “condemns thousands more customers to living in cold and draughty homes, wasting energy and paying more than they need to for their heating.”

There was also little detail on how the new projects would be funded, but last year Britain pledged up to 1.7 billion pounds ($2.2 billion) towards a new large-scale nuclear project and earlier this year said it would hold auctions for renewable project support every year. 

Prime Minister Boris Johnson said the plan would scale up domestic sources of affordable, clean and secure energy.

“This will reduce our dependence on power sources exposed to volatile international prices we cannot control, so we can enjoy greater energy self-sufficiency with cheaper bills,” Johnson said in a statement.Report ad

As Britain removes the low levels of oil and gas it gets from Russia, it will expand further into nuclear, with an ambition to increase capacity to 24 gigawatts (GW) by 2050. That would meet around a quarter of projected electricity demand, up sharply from about 14% today.

All but one of Britain's existing nuclear plants are scheduled to close by 2030, and Hinkley Point C, the first new plant in more than 20 years, is expected to come online in 2026, almost a decade later than originally promised and over budget.

FUNDING DISPUTES

Britain will also target up to 50GW of offshore wind by 2030, up from around 10GW currently, with up to 5GW coming from floating installations in deeper seas. There would also be a new licensing round for North Sea oil and gas, and a consultation on rules for solar projects.

However environmental campaigners were disappointed with the onshore wind plans, after the government said that it would explore partnerships with a limited number of communities who could host wind farms in return for lower bills.

Johnson had promised the strategy almost a month ago but it was delayed by disputes over funding and opposition by some lawmakers to onshore wind farms on aesthetic grounds.

The plan is unlikely to have an immediate impact on supply or prices that have helped push UK inflation to a 30-year high.

British business minister Kwasi Kwarteng said the strategy would take three to four years to make an impact on bills. 

Energy prices surged last year as the global economy reopened after the pandemic. Russia's invasion of Ukraine sent them higher again.

Unlike Germany, Britain is not dependent on Russian energy, with the country supplying 8% of oil demand and less than 4% of natural gas – but it will be hit by competition as Europe seeks alternative sources. Britain will ban Russian oil and coal by the end of the year, and Russian gas as soon as possible.

Surging prices caused British consumer bills to rise 54% in April, and industries such as producers of glass, steel and chemicals say they cannot compete when prices are so high.

Gas-fired plants generated 40% of Britain's electricity in 2021, with wind providing 20%, nuclear 14%, imports 9% and others such as bioenergy, solar and coal the rest.

The government said it would push forward new nuclear projects as soon as possible, including at the Wylfa site in Anglesey, Wales. A new body – Great British Nuclear – will be set up and up to eight new reactors could be delivered.

Reporting by William James and Paul Sandle

Businesses face more pressure as National Insurance increase comes into effect on Wednesday

(qlmbusinessnews.com via bbc.co.uk – – Wed, 6th April 2022) London, Uk – –

“This is worse than Covid or the 2008 crash. There isn't a day that goes by when you aren't hit with another rising cost.”

Adrian Hanrahan is the managing director of Robinson Brothers – a chemicals manufacturer in the West Midlands – and he says that his confidence and that of his customers is beginning to evaporate.

“I'm usually an optimistic person but that has been zapped. I just got off a call with a customer who wants to hold less stock so that means we are holding back on production and investment ourselves.”

He says the £6bn rise in employers' National Insurance that comes in on Wednesday will add £90,000 to his own 250-person payroll – equivalent to the wages of three graduate chemists – and it couldn't come at a worse time.

“It's another kick in the teeth at a time when everything is going up. We use nickel as a catalyser – that's tripled. Plastics, transport, you name it. The sheer volume of price increases is incredible and we can't pass it all on as my customers – and my customers' customers – can't afford it.”

And yet Adrian said it could have been much worse for his company.

“If we hadn't hedged some of our energy costs we would be looking at £1.75m extra a year in bills and that would have probably finished the company.”

Energy prices surge

Businesses that haven't bought gas in advance or whose deals are ending are seeing energy cost rises averaging 250% as they are not protected by a price cap.

Many have already gone under.

The number of company insolvencies in February was 23% higher than the same month last year with county court judgements against firms (an early sign of financial distress) doubling. There is growing concern that thousands more firms who made it through the pandemic will not survive the cost onslaught at the same time as the withdrawal of many Covid support measures.

Julie Palmer, partner at insolvency experts Begbies Traynor, said: “Businesses that have bravely battled through the pandemic could now start to fail as the pressures they face become too much.

“Support from the government such as furlough payments, tax reliefs and a moratorium on landlords being able to evict businesses due to rent arrears are due to expire. It's a perfect storm and there are signs the dam is beginning to break.”

So far the government has focused its efforts to cushion the energy blow on consumers. The eyes of company owners now turn hopefully to the government's long awaited energy strategy due to be published on Thursday.

It's expected to include new and accelerated investments in nuclear, renewables and UK oil and gas production but that will not provide immediate relief to businesses facing crippling bills.

Insiders at the Department for Business pointed towards recent comments from the prime minister in the House of Commons that specific help may be forthcoming for intensive energy users such as steel, ceramics and glass makers.

For them and thousands of other manufacturers, chip shops, restaurants, care homes, and pubs who won't qualify for that help – this is a “cost of doing business” crisis to rival anything in living memory.

The Treasury said nearly half a million UK businesses will benefit from a £1,000 tax cut when it raises the Employment Allowance on Wednesday.

It means smaller firms will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs) bills, up from £4,000.

Chancellor Rishi Sunak said: “This tax cut for half a million businesses will help them thrive and grow to help drive our economic recovery.

“It comes on top of a suite of wider tax cuts available to firms, including 50% business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.”

By Simon Jack

Uk sets out plans to exploit the potential of crypto assets

(qlmbusinessnews.com via uk.reuters.com — Tue, 5th April 2022) London, UK —

Britain set out a detailed plan on Monday to exploit the potential of crypto assets and their underlying blockchain technology to help consumers make payments more efficiently.

As part of creating a global cryptoasset hub, financial services minister John Glen said Britain will legislate to bring some stablecoins under the regulatory net such as complying with existing payment rules.

Stablecoins are cryptocurrencies designed to have a stable value relative to traditional currencies, or to a commodity such as gold, to avoid the volatility that makes bitcoin and other digital tokens impractical for most commerce.Report ad

All stablecoins that reference a fiat currency should be regulated, the government said.

“The approach will ensure convertibility into fiat currency, at par and on demand,” the finance ministry said, adding that the Bank of England would regulate “systemic” stablecoins.

Later on this year Britain will consult on creating regulations for a wider set of cryptoassets like bitcoin, taking the sector's energy consumption into account.Report ad

“If crypto technologies are going to be a big part of the future, then we in the UK want to be in, and in on the ground floor,” Glen told UK Fintech Week.

“We see enormous potential in crypto and we want to give ourselves every chance to take maximum advantage.”

Britain's “detailed plan” will also develop the potential of blockchain, including whether it can be used for issuing British government bonds or gilts.

“I don't know the answer but let's find out,” Glen said.

ROYAL MINT TOKEN

Regulators globally are trying to grapple with cryptocurrencies, with the European Union in front with a draft law on crypto markets.

UK finance minister Rishi Sunak has also asked the Royal Mint to create a non-fungible token which is to be issued by the summer. An NFT is a digital asset that exists on blockchain, a record of transactions kept on networked computers.

A regulatory “sandbox” will be launched by the Bank of England and FCA next year for testing the use of blockchain in market infrastructure, Glen said.

The Law Commission will consider the legal status of decentralised autonomous organisations which use blockchain, while the implications of crypto on tax will also be studied, Glen said.

“On balance, we don't think the tax code will need major surgery to make it work more easily for crypto,” Glen said.

The tax treatment of “defi” loans – where holders of cryptoassets lend them out for a return – will be assessed.

Britain will also look at removing disincentives for fund managers to include cryptoassets in their portfolios, he said.

Additional reporting by William James

Bill shock for millions as unprecedented £700-a-year rise in energy costs hits households

(qlmbusinessnews.com via bbc.co.uk – – Fri, 1st April 2022) London, Uk – –

Millions of people will now feel the impact of an unprecedented £700-a-year rise in energy costs – at the same time as a host of bill hikes take effect.

The 54% rise in the energy price cap means a household using a typical amount of gas and electricity will now pay £1,971 per year.

A further rise pushing the annual bill up to £2,600 should be expected in October, one analyst has told the BBC.

Council tax, water bills and car tax are also going up for some on 1 April.

Minimum wage rates are rising which, along with some financial support from the government, is partially softening the blow.

The £693 a year rise in a typical energy bill will affect 18 million households, with 4.5 million customers on prepayment meters facing an even bigger increase of £708 a year.

Among them is Winston Carrington, a grandfather in his 70s, who said he was growing vegetables in the garden of his Manchester home to help ease the impact of the rising cost of living.

“I'm going to grow, and I'm going to fill my freezer this year with my own produce. I'm going to have to,” said Mr Carrington, who uses a prepayment meter.

“I can't go away this year again, not because of Covid or anything. I just can't afford to go away. The state pension that we're getting at the moment does not cover what I need.”

Prices in general are rising at their fastest rate for 30 years, but the sudden increase in the cost of energy is the most significant for individuals.

New official figures suggest four in 10 bill-payers have been finding it very, or somewhat, difficult to afford their energy costs.

The governor of the Bank of England, Andrew Bailey, said the country is facing the biggest single shock from energy prices since the 1970s. It is the largest increase, by far, in the energy regulator Ofgem's price cap, since it was introduced.

The cap, set every six months for England. Wales and Scotland, is designed to protect domestic customers from the volatility of wholesale energy prices.

However, official forecasters and analysts have warned people to be braced for another huge rise in energy bills when the next cap takes effect in October. Wholesale prices have been affected by the war in Ukraine and ongoing pressure on suppliers.

This could add another £629 to a typical bill in October, according to the most up-to-date prediction, provided to the BBC from leading energy consultancy firm Cornwall Insight.

If this proved to be accurate, then the average bill next winter would be double that of the winter just gone. A typical bill is expected to fall back to the current level in summer 2023, although longer-term forecasts are tricky.

Bill Bullen, the boss of Utilita, warned that elderly people and children were at serious risk over the next winter because of a lack of heating.

“We are going to see an extra £500 or £600 added to bills in October, and frankly the chancellor's going to have to fund that entirely for low-income households,” he told the BBC's Today programme.

“He won't be able to afford to take this problem away for everybody… but for customers who can't respond to that price [increase], that's where the help needs to be targeted.”

Chris O'Shea, chief executive of Centrica, which owns the UK's largest supplier British Gas, said his businesses was supporting struggling customers and was giving grants to those most in need.

“We would love to do more. The reality is that for a retail energy company, the market has gone through quite a change, and profits have reduced quite substantially,” he told the BBC's Big Green Money Show.

However, he accepted that profits had risen sharply for the heavily taxed exploration arm of the business.

Month of bill rises

Council taxes and water bills are also going up for many people, added to the rising cost of food and household items.

One estimate suggests that a typical consumer is now facing a £73 a month increase in bills, of which about £58 is from rising energy costs.

“The added cost pressures set to come into play in April threatens to obliterate even the most finely tuned budgets.” said Myron Jobson, senior personal finance analyst at Interactive Investor.

The Office for National Statistics said that low earners, renters, parents, people with disabilities, unemployed people and divorcees were least able to afford a bill shock.

Even before the latest increases, charity Citizens Advice said that in March, it referred 24,752 people to food banks or to other charitable support, up by 44% compared to the same month last year.

The government has said it was taking “decisive action” to help people with the cost of living, including a £200 reduction to energy bills in October – which needs to be paid back in instalments, and a £150 reduction in council tax bills for 80% of billpayers.

Speaking to BBC Breakfast, Sir Keir Starmer, the leader of the Labour party, branded the government's response as “pathetic”.

He accused the government of forcing people to choose between heating their homes or eating.

He said that the Labour party would introduce a one-off windfall tax on the profits of oil and gas companies and use the money to help households struggling to cope with rising energy bills.

But Chancellor Rishi Sunak told the BBC's Newscast: “I'm confident in what we've done. I know it's tough for people. We're facing a very difficult situation with the price of things going up and I want to do what we can to ameliorate some of that, but I'm also honest with people that we can't ameliorate all of it, sadly.”

By Kevin Peachey

UK consumers see their fifth consecutive month of rising prices

(qlmbusinessnews.com via news.sky.com– Wed, 30th Mar 2022) London, Uk – –

Consumers have seen their fifth consecutive month of rising prices amid mounting cost pressures throughout the global supply chain.

Shop price inflation has hit its highest rate since September 2011 – but the full impact of mounting costs is yet to be seen.

Annual inflation accelerated to 2.1% in March, up from 1.8% in February – the highest rate in more than a decade, according to the BRC-NielsenIQ Shop Price Index.

Food inflation jumped to 3.3% – its highest rate since March 2013 – while non-food inflation reached 1.5% in March, up from 1.3% in February and its top rate since February 2011.

It means consumers have seen their fifth consecutive month of rising prices amid mounting cost pressures throughout the global supply chain.

‘Consumers will not have an easy ride this year'

The British Retail Consortium (BRC) said many of these costs were beginning to be exacerbated by the situation in Ukraine but the full impact on prices was yet to be seen.

Wheat prices have risen sharply, as well as oil which has impacted the cost of domestic energy, fertiliser and transporting goods.

BRC chief executive Helen Dickinson said: “Our Shop Price Index has been rising more modestly than other inflation measures as retailers were able to limit price rises on many essential goods.

“By keeping the prices of key items down and expanding value ranges, retailers are trying to support customers most affected by the cost-of-living squeeze, many of whom will face higher energy prices and national insurance contributions from 1 April.

“With overall inflation likely to rise even higher according to the Bank of England, consumers will not have an easy ride this year. The war in Ukraine and volatility in commodity markets is likely to further dampen consumer confidence in the coming months.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With cost-of-living increases accelerating, the next few months will be a difficult time for consumers.

“Rising food prices will start to impact what's put in the shopping basket so supermarkets will need to adapt ranges to help shoppers manage what they spend on their weekly groceries.”