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FirstFT: Inflation in rich economies hits 25-year high

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Inflation in the world’s rich economies has hit a 25-year high, fuelling concerns about the rising cost of living for households and increasing pressure on central banks to raise interest rates.

The annual pace of consumer price growth in the OECD group of developed nations hit 5.8 per cent in November, according to data released on Tuesday, up from just 1.2 per cent in the same month the previous year and the highest rate since May 1996.

The increase was driven by energy prices, which soared by 28 per cent, up more than 3 percentage points from the previous month to the highest rate since June 1980. Food price inflation also picked up strongly to 5.5 per cent, from 4.6 per cent in the previous month.

The data came as the incoming governor of Germany’s central bank warned that inflation could remain high for longer than economists expect.

In the US, the chair of the Federal Reserve warned that high inflation poses a “severe threat” to a recovery in the nation’s jobs market.

Line chart of Annual % change in consumer price index, OECD average showing Inflation in rich countries hits a 25-year high

Are you experiencing price inflation where you live? Tell us what you’re seeing at [email protected]. Thanks for reading FirstFT Asia. Here’s the rest of today’s news — Emily

1. Russian troops to withdraw, says Kazakhstan president Kazakhstan president Kassym-Jomart Tokayev, who requested help from Russia last week after claiming the protests were a “coup d’état”, said yesterday that the Moscow-led military mission was complete and the contingent would leave the country within 10 days.

Russia sent a peacekeeping mission last week to help quell the worst unrest in Kazakhstan’s modern history
Russia sent a peacekeeping mission last week to help quell the worst unrest in Kazakhstan’s modern history © Russian Defense Ministry Press Service/AP

2. Citadel Securities sells $1.2bn stake to Sequoia and Paradigm Hedge fund billionaire Ken Griffin has sold a $1.2bn stake in Citadel Securities to venture capitalists Sequoia and Paradigm, paving the way for an initial public offering of one of the world’s biggest market makers.

3. Indian government to take stake in Vodafone Idea The company has approved a rescue plan to make India’s government its largest shareholder, nationalising an almost 36 per cent stake in the flailing telecoms operator to prevent its collapse.

4. Chip crisis hits Volkswagen EV sales in China Volkswagen sold 10,000 fewer electric cars in China than expected last year, as deliveries to customers in its biggest market were hit by semiconductor shortages amid fierce competition from domestic brands.

5. Yen at risk of further fall against dollar in 2022, say analysts The Japanese yen could fall further in the coming weeks after breaking through a crucial support level against the US dollar and hitting a 50-year low against the currencies of Japan’s most important trading partners, according to analysts.

Coronavirus digest

  • English football’s Premier League has won a High Court payout of at least $212m from a Chinese broadcaster over a contract that collapsed during the pandemic.

  • The World Health Organization said countries were “a way off” from treating coronavirus as endemic. A top official warned that more than half of Europe could be infected with Omicron within the next two months.

  • Boris Johnson faces fresh questions about his government’s adherence to its own Covid rules after it emerged that the UK prime minister attended a “bring your own booze” event during lockdown.

  • China has locked down another city. Residents of Anyang, a city of 5.5m, were ordered to stay home while mass Covid-19 testing takes place.

  • As a solution to the anti-vaxxer problem, Andreas Utermann argues that those unvaccinated by choice should be required to pay for their Covid hospital care.

The day ahead

Monthly consumer price index data With global inflation ticking up, eyes will be on CPI data released from China, India, Russia and the US today.

Nato meetings The Military Committee, the highest military authority of Nato, meets in Chiefs of Defence session at Nato headquarters in Brussels. Separately, the Nato-Russia Council will meet to discuss the build-up of Russian soldiers along Ukraine’s border

Federal Reserve Beige Book published The US central bank will release its first summary on economic conditions in 2022.

What else we’re reading

China applies brakes to Africa lending From almost nothing, Chinese banks now make up about one-fifth of all lending to Africa. But Beijing has signalled a more cautious approach following a 20-year lending spree. What does that mean for the continent?

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How to ask for a pay rise — and get one! Claer Barrett, the FT’s moneymaking expert, pulls apart that big, scary box labelled “Asking for a pay rise” in this week’s episode of the Money Clinic. This is a repeat of an earlier episode.

North Korea’s embrace of international climate goals North Korea’s reclusive regime typically eschews engagement with the international community. But having been devastated in recent decades by a series of extreme weather events, Pyongyang has proved itself willing to engage on a host of environmental issues.

Indian bankers look to 2022 ‘feast’ in ebullient mood Since FT’s Chloe Cornish moved to India’s business capital Mumbai in late November, financiers have met her with an encouraging greeting: “You’ve arrived in India at a great time!” Fundraisings are surging as the subcontinent bounces back from the pandemic.

Will the UK and EU agree a deal on Northern Ireland? Talks will resume this week on how to resolve the long-running dispute over trading arrangements. But officials remain far apart on the substance of how to manage the new trade border in the Irish Sea. The Financial Times looks at the prospects for a deal.

Film

Jessica Kingdon had remarkable access to a wide range of businesses in China for her Oscar-longlisted documentary Ascension. From sex dolls to MAGA hats, here’s what the film says about the Chinese dream.

A worker in Zhongshan inspects the head of a sex doll during assembly in the documentary © MTV Documentary Films

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