US Business

US and European stock markets slumped Wednesday as inflation data and corporate reports stoked investor fears about recession and earnings.

News that UK inflation has spiked to a 40-year peak of nine percent in April helped push London stocks down 1.1 percent.

The figure also sent the pound sliding on worries that the cost-of-living crisis will spark a recession in Britain, in line with the Bank of England’s recent forecast.

In the eurozone, Frankfurt fell 1.3 percent and Paris shed 1.2 percent in value.

On Wall Street, the Dow was down 2.3 percent in late morning trading on worries high inflation will erode corporate earnings.

The tech-heavy Nasdaq Composite fell by 3.1 percent.

– Recession ‘increasingly inevitable’ –

“A recession is looking increasingly inevitable in the UK and other countries… if the inflation data does not improve,” OANDA analyst Craig Erlam told AFP.

“That does not bode well for equity markets.”

The technical definition of a recession is two quarters of economic contraction in a row.

Investors remain on red alert over decades-high inflation, which has surged around the world as Russia’s invasion of Ukraine fuels spiking energy and food prices.

That in turn has sparked interest rate hikes from major central banks including the Bank of England and the US Federal Reserve, as they seek to contain runaway prices.

Concerns that companies will have trouble were reignited by the latest earnings from US retailer Target, which saw its profits fail to meet analyst expectations despite higher-than-expected sales.

Target’s “report is a stark example of the profit margin pressures most companies are facing due to high inflation and it has stoked concerns about being stuck in a stagflation environment,” said market analyst Patrick O’Hare at Briefing.com.

Stagflation is when an economy experiences high inflation and little or no growth.

Target’s shares plunged by around a quarter.

The miss by Target follows a similar performance by rival Walmart and online retail giant Amazon, which suffered its first quarterly loss since 2015 at the start of this year.

“The big falls in shares of these retails … highlights the damage inflation is inflicting on the sector’s profit margins,” said Fawad Razaqzada at City Index.

“What’s more, consumers are getting squeezed as well and if they now start to cut back on spending then retailers could suffer even further,” he added.

Asian equities traded mixed on Wednesday, despite strong Wall Street gains after brisk US retail sales data, although strong data is likely to invite further interest rate hikes by the Federal Reserve.

The Fed’s monetary policy tightening has sent jolts through markets this year, deepening the apprehension of investors already roiled by China’s Covid-19 lockdowns and Russia’s invasion of Ukraine.

– Key figures at around 1530 GMT –

New York – Dow: DOWN 2.3 percent at 31,898.48  points

EURO STOXX 50: DOWN 1.1 percent at 3,598.84

London – FTSE 100: DOWN 1.1 percent at 7,438.09 (close)

Frankfurt – DAX: DOWN 1.3 percent at 14,007.76 (close)

Paris – CAC 40: DOWN 1.2 percent at 6,352.94 (close)

Hong Kong – Hang Seng Index: UP 0.2 percent at 20,644.28 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,085.98 (close)

Tokyo – Nikkei 225: UP 0.9 percent at 26,911.20 (close)

Brent North Sea crude: DOWN 1.9 percent at $109.81 per barrel

West Texas Intermediate: DOWN 1.9 percent at $110.28 per barrel

Euro/dollar: DOWN at $1.0502 from $1.0550 at 2100 GMT Tuesday

Pound/dollar: DOWN at $1.2403 from $1.2493

Euro/pound: UP at 84.64 pence from 84.45 pence

Dollar/yen: DOWN at 128.19 yen from 129.38 yen

burs-rl/lc

China’s premier called for greater “urgency” in rolling out measures to support the virus-battered economy, state media reported Wednesday, days after data highlighted the stark impact of Covid-19 restrictions.

China — the last major global economy sticking to a rigid zero-Covid policy — is battling an economic slump due to prolonged virus lockdowns that have constricted supply chains, quelled demand and stalled manufacturing.

“All localities and departments should step up their sense of urgency, and new measures that can be used should be used,” Li Keqiang said at a symposium on Wednesday, according to state broadcaster CCTV.

He added that efforts to support the economy should bring it “back to normal quickly” after admitting that indicators have “weakened significantly” since March, with a particular dip in April.

Data on Monday showed retail sales and factory output last month had slumped the most since the start of the pandemic, while unemployment edged back toward its February 2020 peak.

Beijing’s unrelenting approach to Covid-19 outbreaks has snarled supply chains and locked down tens of millions of people, hitting major financial, industrial and tourist hubs.

Borders remain closed to most foreigners and a slew of international sports events have been scrapped over pandemic concerns.

But Chinese leader Xi Jinping pledged Wednesday to keep his country open to the world, just days after immigration authorities doubled down on border restrictions.

“China’s resolve to open up at a high standard will not change, and… the door of China will open still wider to the world,” Xi told a conference on global trade, according to a readout from the foreign ministry.

Beijing has significantly tightened border controls since last year and has said it will only issue new Chinese passports if travel is considered essential.

China has targeted full-year growth of around 5.5 percent, but data published in April showed that first-quarter growth slowed to 4.8 percent after the world’s second-biggest economy lost steam in the latter half of last year.

And the economic targets hold a political dimension for Xi, who is eyeing another term in power.

Xi has pinned his legacy on China’s strong economic growth and winning the “battle” against Covid-19.

But the current outbreak is the country’s worst since the virus emerged in Wuhan in late 2019, and the economy is beginning to weaken. 

– Tech support –

Li also called for backing Chinese tech companies’ bids to list domestically and abroad, a day after Communist Party leaders doubled down on support for the tech sector in a rare meeting with executives.

China’s economic slowdown appears to have motivated a softer approach toward the vast, money-spinning tech sector, after an 18-month clampdown driven by fears massive internet companies control too much data and expanded too quickly.

Vice Premier Liu He and other Communist leaders addressed executives and offered support for “the sustainable and healthy development of the platform economy and the private economy,” state broadcaster CCTV said Tuesday.

During the tech crackdown, IPOs from Alibaba’s Ant Group and Didi Chuxing — China’s Uber — were spiked, while millions of dollars of fines over anti-trust and data breaches were ladled out to tech giants. 

Chinese tech shares surged late April after officials pledged support for internet firms at a Politburo meeting.

Tech giants including Alibaba, Tencent and Baidu were marginally lower Wednesday morning, with e-commerce behemoth JD slumping over 4 percent after it recorded a 3 billion yuan ($444 million) loss in first-quarter earnings. 

On Wednesday, Tencent reported record-low quarterly revenue growth at nearly zero, reaching the slowest pace since the company went public in 2004.

Some of the Trump-era tariffs imposed on China appear to hurt consumers and businesses more than address real issues posed by the Asian giant, US treasury secretary Janet Yellen said Wednesday, as the Biden administration mulls lifting the punitive duties.

American tariffs on hundreds of billions of dollars of Chinese imports are due to expire in July, and President Joe Biden has faced growing calls to get rid of the punitive duties to help combat the highest US inflation in over four decades.

Speaking at a press conference in Germany, Yellen voiced support for such a move.

Some of the tariffs imposed by former president Donald Trump “seem as though they impose more harm on consumers and businesses and aren’t very strategic in the sense of addressing real issues we have with China, whether it concerns supply chain vulnerabilities, national security issues or other unfair trade practices,” she said.

“And so I see a case not only because of inflation, but because there would be benefits to consumers and firms… that some relief could come from cutting some of them,” she told reporters ahead of a G7 finance ministers meeting in Koenigswinter, near Bonn.

“But we’re having these discussions,” she added.

– Political risk –

Biden said earlier this month he was “discussing” lifting trade tariffs on China, but that no decision had been made yet.

Supporters of the step argue that ending the tariffs would cut roaring US inflation by making imports cheaper.

But lifting the measures would likely bring a political risk for the White House, which does not want to be branded weak on China.

The tariffs were first imposed in 2018, eventually ramping up to cover about $350 billion in annual imports from China in retaliation for Beijing’s theft of American intellectual property and forced transfer of technology.

The measures will lapse July 6 unless there is a request to continue them, at which point they would be subject to review.

US trade officials said earlier this month they are reaching out to the public to seek comment on whether to extend the tariffs, including sending letters to 600 firms that expressed support for the measures.

Foreign companies have long complained about Beijing’s failure to protect know-how and patents, including in some cases forcing firms to share information with domestic partners as the price for doing business in the massive Chinese market.

Prior to Trump, US administrations had sought to resolve the issues through dialogue and gentle pressure, but the Republican president pulled out all the stops, sparking retaliation from Beijing on US goods.

Consumed daily by billions of people around the world in bread and other flour-based products, wheat is a basic food staple, making current record prices for the cereal a global concern. 

Low rainfall or droughts in major producing countries were already causing worries before Russia’s invasion of Ukraine in February sent markets soaring.

Since then, wheat-exporting powerhouse Ukraine has struggled to sell and sow its crops, putting consumers in poor countries at risk of poverty and even famine

Sebastien Abis, head of the Demeter agricultural think tank in Paris and an expert at the Institute for International and Strategic Relations, explains what’s at stake: 

– Is it possible to replace wheat with something else? –

“It’s very difficult. Wheat is the most important cereal for global food security: it is eaten by billions of humans in the form of bread, flour or semolina. 

“Corn is grown in larger quantities but is mostly used for animal feed or for industrial purposes.

“Beyond its nutritional qualities, wheat is a very social and democratic product, enabling people to make low-cost food — and it is often subsidised.”

– But prices are putting it beyond the reach of consumers in some countries such as Lebanon or Yemen? –

“Yes, because of shortages and because you can’t produce it just anywhere. You can grow it in temperate climates, but there are only a dozen countries that produce a lot and can export it, particularly Russia, Ukraine, the United States, Australia.

“In recent years, the United States has produced less and less because they are switching to corn and soya . After the Soviet period, the two countries that surged ahead were Ukraine and Russia. 

“Ukraine accounted for 12-13 percent of global exports in recent years.”

– Is the lack of Ukrainian production the reason for the current situation? –

“We have at the same time a dreadful geopolitical situation, with multilateralism faltering, to which we must add worrying climatic events, with droughts in the southern Mediterranean basin, worries in the United States and in Europe. 

“India, which had an exceptional harvest last year and reserves that enabled it to sell more on the markets, has been hit with a terrible drought and will not be able to export. 

“Prices that were already high before the war are now exploding: wheat reached 440 euros ($463) a tonne on the Euronext market on Monday.”

– That came after India announced it would no longer export wheat. Why? –

“India had announced a rather ambitious target of exporting 10 million tonnes. It had sold around 3-3.5 million tonnes before it put its export ban in place, so one of the questions is whether it will honour its commitments.

“The situation is tense because there’s no country that can put more than usual into the export market. Perhaps Russia will if it has a good harvest. 

“But even if the war stopped, Ukraine’s production and exports will not bounce back immediately.”

– Have we reached the peak of the crisis, ahead of the harvests in the US and Europe this summer? 

“We have real long-term risks. We still haven’t seen all the shocks, because on global markets for the last two months we’ve been seeing fulfilments of contracts signed before the Russian invasion. We’re now entering the hard part.” 

– What about stocks? – 

“For wheat, we have around 270 million tonnes for a planet that consumes around 800 million a year. Around half are in China which has one year’s consumption in reserve. Excluding China, cereal stocks are at their lowest level in 25 years. 

“We need international solidarity and cooperation. We can’t leave countries to struggle on their own for food security but at the same time you can’t be surprised that some countries are looking out for themselves first and foremost.

“We need to produce everywhere where we can produce, notably in Africa. But for that we need peace and security”. 

US and European stock markets slid Wednesday as inflation data and corporate reports stoked investor fears about recession and earnings.

News that UK inflation has spiked to a 40-year peak of nine percent in April helped push London stocks 0.4 percent lower in afternoon trading.

The figure also sent the pound sliding on worries that the cost-of-living crisis will spark a recession in Britain, in line with the Bank of England’s recent forecast.

In the eurozone, Frankfurt shed 0.6 percent and Paris 0.8 percent in value.

On Wall Street, all three major stock indices opened lower on worries high inflation will erode corporate earnings.

– Recession ‘increasingly inevitable’ –

“A recession is looking increasingly inevitable in the UK and other countries… if the inflation data does not improve,” OANDA analyst Craig Erlam told AFP.

“That does not bode well for equity markets.”

The technical definition of a recession is two quarters of economic contraction in a row.

Investors remain on red alert over decades-high inflation, which has surged around the world as Russia’s invasion of Ukraine fuels spiking energy and food prices.

That in turn has sparked interest rate hikes from major central banks including the Bank of England and the US Federal Reserve, as they seek to contain runaway prices.

Concerns that companies will have trouble were raised by the latest earnings from US retailer Target, which saw its profits fail to meet analyst expectations despite higher-than-expected sales.

Target’s “report is a stark example of the profit margin pressures most companies are facing due to high inflation and it has stoked concerns about being stuck in a stagflation environment,” said market analyst Patrick O’Hare at Briefing.com.

Stagflation is when an economy experiences high inflation and little or no growth.

Target’s shares plunged by more than a quarter as trading got underway on Wall Street.

Asian equities traded mixed on Wednesday, despite strong Wall Street gains after brisk US retail sales data, although strong data is likely to invite further interest rate hikes by the Federal Reserve.

The Fed’s monetary policy tightening has sent jolts through markets this year, deepening the apprehension of investors already roiled by China’s Covid-19 lockdowns and Russia’s invasion of Ukraine.

Despite recession concerns, oil prices pushed higher.

“Oil prices are on the rise again as Shanghai takes a big step towards reopening following three days of no new cases in the broader community,” said OANDA’S Erlam.

– Key figures at around 1330 GMT –

London – FTSE 100: DOWN 0.4 percent at 7,485.25 points

Frankfurt – DAX: DOWN 0.6 percent at 14,095.25

Paris – CAC 40: DOWN 0.8 percent at 6,380.63

EURO STOXX 50: DOWN 0.7 percent at 3,616.00

New York – Dow: DOWN 0.9 percent at 32,368.19

Hong Kong – Hang Seng Index: UP 0.2 percent at 20,644.28 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,085.98 (close)

Tokyo – Nikkei 225: UP 0.9 percent at 26,911.20 (close)

Brent North Sea crude: UP 1.0 percent at $113.07 per barrel

West Texas Intermediate: UP 1.4 percent at $113.97 per barrel

Euro/dollar: DOWN at $1.0520 from $1.0550 at 2100 GMT Tuesday

Pound/dollar: DOWN at $1.2407 from $1.2493

Euro/pound: UP at 84.79 pence from 84.45 pence

Dollar/yen: DOWN at 128.74 yen from 129.38 yen

burs-rl/lth

China’s premier called for greater “urgency” in rolling out measures to support the virus-battered economy, state media reported Wednesday, days after data highlighted the stark impact of Covid-19 restrictions.

China — the last major global economy sticking to a rigid zero-Covid policy — is battling an economic slump due to prolonged virus lockdowns that have constricted supply chains, quelled demand and stalled manufacturing.

“All localities and departments should step up their sense of urgency, and new measures that can be used should be used,” Li Keqiang said at a symposium on Wednesday, according to state broadcaster CCTV.

He added that efforts to support the economy should bring it “back to normal quickly” after admitting that indicators have “weakened significantly” since March, with a particular dip in April.

On Monday, data showed retail sales and factory output last month had slumped the most since the start of the pandemic, while unemployment edged back toward its February 2020 peak.

Beijing’s unrelenting approach to Covid-19 outbreaks has snarled supply chains and locked down tens of millions of people, hitting major financial, industrial and tourist hubs.

The country’s borders also remain closed to most foreign travellers and a slew of international sports events have been scrapped over pandemic concerns.

China has targeted full-year growth of around 5.5 percent, but data published in April showed that first-quarter growth slowed to 4.8 percent after the world’s second-biggest economy lost steam in the latter half of last year.

And the economic targets have a political dimension for Chinese leader Xi Jinping, who is eyeing another term in power.

Xi has pinned his legacy to China’s strong economic growth and winning the “battle” against Covid.

But the current outbreak is the country’s worst since the virus emerged in Wuhan in late 2019, and the economy is beginning to weaken. 

– Tech support –

Li also called Wednesday for backing Chinese tech companies’ bids to list domestically and abroad, a day after Communist Party leaders doubled down on support for the tech sector in a rare meeting with executives.

China’s economic slowdown appears to have motivated a softer approach toward the vast, money-spinning tech sector, after an 18-month clampdown driven by fears massive internet companies control too much data and expanded too quickly.

Vice Premier Liu He and other Communist leaders addressed executives, including Robin Li of Baidu — universally used for its search engine and mapping service — and Zhou Hongyi of internet security firm Qihoo 360, state media reported late Tuesday.

Liu offered support for “the sustainable and healthy development of the platform economy and the private economy,” CCTV said.

During the tech crackdown, overseas IPOs from Alibaba’s Ant Group and Didi Chuxing — China’s Uber — were spiked, while millions of dollars of fines over anti-trust and data breaches were ladled out to tech giants. 

Chinese tech shares surged late April after officials pledged support for internet firms at a Politburo meeting.

Tech giants including Alibaba, Tencent and Baidu were marginally lower Wednesday morning, with e-commerce behemoth JD slumping over 4 percent after it recorded a 3 billion yuan ($444 million) loss in first-quarter earnings. 

On Wednesday, Tencent reported record-low quarterly revenue growth at nearly zero, reaching the slowest pace since the company went public in 2004.

Asian stocks were mixed Wednesday following a strong start in some markets, which took the lead from Wall Street where traders were cheered by brisk US retail sales data.

The US Federal Reserve’s tightening of monetary policy to contain surging inflation has sent jolts through global markets, deepening the apprehensions of investors already roiled by China’s Covid-19 lockdowns and the Russian invasion of Ukraine.

But there was some good news out of the United States, with data showing increased spending by Americans in April. Retail sales rose 0.9 percent — partly boosted by a rebound in auto purchases.

“The economy is slowing but the consumer still looks good and that means the economy is still positioned to avoid a recession,” said Edward Moya of OANDA. 

Industrial production also rose in April — “another sign the economy isn’t falling apart just yet”, he added.

Wall Street closed with gains, with the tech-rich Nasdaq jumping nearly three percent.

Tokyo, Sydney and Singapore stayed up in Wednesday’s trade thanks to the bounce in New York, while Hong Kong and Shanghai between red and green. 

The US consumer data added to the boost earlier this week from China, where authorities said Shanghai — the economic engine of the world’s second-largest economy — will “gradually reopen” businesses.

Most of the city’s 25 million people were placed under lockdown for weeks as authorities battled a major virus outbreak.

Millions were still confined to their homes Wednesday as confusion abounded over official statements about achieving zero Covid cases.

But just the indication of an easing was enough to cheer markets, which have been rattled by concerns about the impact of China’s lockdowns on the global economy — especially with snarled supply chains.

Communist leaders also held a rare meeting Tuesday with tech executives to express support for a sector Beijing had cracked down on before Covid started inflicting economic wounds. 

“Although investors are aware that there won’t be many punitive measures for tech from now, Covid concerns will continue to depress valuations across the board,” Hou Anyang, fund manager at Frontsea Asset Management, told Bloomberg.

– Fed inflation plans –

Central banks around the world are concerned about skyrocketing prices, and on Tuesday Federal Reserve Chair Jerome Powell said there needs to be “clear” evidence that inflation is coming down before efforts to cool the economy can be pulled back.

He acknowledged that it may be a “bumpy” ride that would inflict some pain.

His comments were in line with market expectations, said Stephen Innes of SPI Asset Management. 

“Still, the debate is evolving among the active trading community from recessionary capitulation mode to one that is short and not a particularly deep recession,” he said. 

“So while this is a tacit acceptance that the Fed is in catch-up mode and is prepared to constrain demand to get inflation down, they are unlikely to do it in a jackhammer fashion.”

Across the Atlantic, Britain’s annual inflation rate surged to a 40-year high at 9.0 percent for April, according to a statement from the Office for National Statistics on Wednesday. 

London slid at the open, while Frankfurt and Paris wavered.

Bank of England governor Andrew Bailey warned earlier in the week of “apocalyptic” food costs fuelled by the war in Ukraine, a major wheat and cooking oil producer.

– Key figures at around 0830 GMT –

Hong Kong – Hang Seng Index: UP 0.2 percent at 20,644.28 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,085.98 (close)

London – FTSE 100: DOWN 0.2 percent at 7,505.88

Tokyo – Nikkei 225: UP 0.9 percent at 26,911.20 (close)

Brent North Sea crude: UP 1.5 percent at $113.57 per barrel

West Texas Intermediate: UP 1.9 percent at $114.52 per barrel

Euro/dollar: DOWN at $1.0497 from $1.0550 at 2030 GMT Tuesday

Pound/dollar: DOWN at $1.2382 from $1.2486

Euro/pound: UP at 84.77 pence from 84.47 pence 

Dollar/yen: DOWN at 129.16 yen from 129.37 yen

New York – Dow: UP 1.3 percent at 32,654.59 (close)

The US Justice Department sued Las Vegas and Macau casino mogul Steve Wynn Tuesday to force him to register officially as an agent for the Chinese government.

Wynn, the founder and former chief executive of Wynn Resorts, acted on behalf of Beijing in 2017 when he met with president Donald Trump and senior administration officials in a Chinese effort to gain custody over exiled tycoon Guo Wengui, the department said.

Guo was wanted in China for financial fraud and other allegations, but was close to Trump advisor Steve Bannon, supporting Bannon’s media business and other activities, and had asked for political asylum in the United States.

The Justice Department said that in June and August 2017, Wynn contacted Trump and had dinner with the president to convey Beijing’s request that the US cancel Guo’s visa or have him otherwise removed from the country.

“Wynn engaged in these efforts at the request of Sun Lijun, then-vice minister of the MPS,” the Justice Department said, referring to China’s Ministry of Public Security.

Besides raising it with Trump, Wynn, who was a former Republican Party finance chairman, also had “multiple discussions” with senior White House and National Security Council officials “about organizing a meeting with Sun and other PRC government officials” on the issue, it said.

At the time Wynn’s company owned and operated three casinos in Macau, Asia’s largest gambling hub.

The Justice Department alleges that Wynn carried out Sun’s requests “out of a desire to protect his business interests in Macau.”

It says that Wynn was advised that he had to register as a lobbyist for China under the Foreign Agents Registration Act, but refused to do so.

Asked about the department’s move at a regular press briefing on Wednesday, Beijing said Washington was “deliberately hyping the threat of China.”

“We hope the US can abandon a Cold War and zero-sum-game mentality, stop making China an issue, and stop throwing dirty water at China,” said foreign ministry spokesman Wang Wenbin.

Wynn was enlisted in the lobbying effort partly by another wealthy US businessman, Trump friend and former top Republican fundraiser, Elliott Broidy. 

In 2020, Broidy pleaded guilty to violating the Foreign Agents Registration Act and forfeited $6.6 million in a plea deal.

Wynn, 80, was forced to step down as CEO of Wynn Resorts in 2018 amid sexual misconduct allegations.

In September, three companies owned by Guo were ordered by the US Securities and Exchange Commission to pay $539 million in penalties to settle charges over illegal cryptocurrency sales.

Britain’s annual inflation rate surged to a 40-year high last month on rocketing energy costs, official data showed Wednesday, sparking opposition calls for the government to announce an emergency budget to combat a cost-of-living crisis.

Consumer prices index inflation hit 9.0 percent in April from 7.0 percent in March, the Office for National Statistics said in a statement.

The ONS estimated that April was the highest level since 1982, and the fastest rate since the current data series began in 1989.

Nations across the world are plagued by decades-high inflation as the Ukraine conflict pushes up energy and food prices, in turn forcing the Bank of England, the US Federal Reserve and others to ramp up interest rates.

The squeeze on UK household budgets tightened further in April due to tax hikes, while wages are failing to keep pace with inflation.

– ‘Global challenges’ –

“Countries around the world are dealing with rising inflation,” said British finance minister Rishi Sunak.

“Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.

“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.”

The main opposition Labour party, however, wants an emergency budget to help Britons cope with the cost-of-living crunch.

Labour finance spokeswoman Rachel Reeves described the inflation data as “a huge worry for families already stretched”.

“Today, Labour force a vote for an emergency budget and for a plan for growth.”

Labour is also calling for a windfall tax on the energy sector, which has been boosted as gas and oil prices rocketed on supply worries following key producer Russia’s invasion of Ukraine.

– ‘Apocalyptic’ –

Bank of England governor Andrew Bailey on Monday warned of an “apocalyptic” situation surrounding runaway food costs — which he said were fuelled by major wheat and cooking oil producer Ukraine finding itself unable to export its goods.

Addressing British MPs, Bailey spoke also of a “very real income shock” coming from surging energy and food prices.

Britain risks falling into recession with inflation expected to top 10 percent by the end of the year, the BoE warned earlier this month.

It came as the central bank hiked its main interest rate by a quarter-point to one percent to tackle inflation.

That was the fourth straight increase by the BoE, while its key rate now stands at the highest level since 2009.

– Energy cap –

UK consumer prices leapt in April after a cap on domestic gas and electricity was hiked due to spiking wholesale energy costs.

“Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect,” added ONS chief economist Grant Fitzner.

“Around three-quarters of the increase in the annual rate this month came from utility bills.”

Official data showed Tuesday that Britain’s unemployment rate has fallen further to a near five-decade low, but the value of wages continues to erode as inflation soars.

The economy shrank in March on fallout from soaring consumer prices, data showed last week, increasing the prospect of the country falling into recession.

Raised rates have lifted borrowing costs for consumers and businesses, further impacting spending.

Japanese giant Sony brought forward its deadline for reaching carbon neutrality by a decade on Wednesday, saying it is now targeting net-zero emissions across its business by 2040.

The electronics and entertainment firm said the decision was taken “as climate change risks become more apparent and serious worldwide, and the transition to a decarbonised society has become an urgent issue”.

Climate campaigners praised the move, but raised doubts over an element of how Sony aims to reach the goal — investing in new technology that removes carbon from the atmosphere or converts it into a less harmful compound.

Sony said it wants its own factories to be carbon neutral by 2030, also a decade earlier than its previous goal, and plans to reach that by increasing use of renewable power and energy-saving.

Eliminating emissions from areas “such as products, supply chains, and logistics”, however, is to be achieved in part by investing in start-ups focused on carbon removal and projects that encourage carbon absorption with so-called augmented ecosystems.

But that technology remains unproven, said Eri Watanabe, senior finance campaigner at Japanese climate group 350.org.

Sony’s announcement “is a positive signal that the company is serious about tackling climate change”, but these removal methods are “unproven, and (it is) uncertain if it can contribute to the decarbonisation pathway”, she said.

She said Sony could influence other Japanese firms to upgrade their climate targets but urged the company not to rely “on unproven technologies to reduce its emissions.”

UN climate experts say humanity has fewer than three years to halt the rise of planet-warming carbon emissions, and less than a decade to slash them by nearly half to have a shot at capping global warming at a target 1.5 degrees Celsius.

Japan, which is highly dependent on imported fossil fuels, aims to become carbon neutral by 2050. The country is the world’s sixth-biggest carbon emitter if the EU is counted as one bloc, according to European Commission data.