March 25, 2023

US inflation hits 6.8% in November, highest since 1982 – business live

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The UK economy came to a near-standstill in October, raising concerns that the recovery has faltered just as new restrictions are introduced to combat Omicron.

Data just released shows that GDP grew by just 0.1% in October, much weaker than the 0.4% which economists had expected, as firms struggled with supply chain problems and staff shortages.

The Office for National Statistics reports that services output grew by 0.4% in October 2021, partly driven by human health activities due to a rise in face-to-face appointments at GP surgeries in England.

Services output overall has now reached its pre-coronavirus pandemic levels.

But other parts of the economy shrank during the month.

Production output decreased by 0.6% in October, with electricity and gas down by 2.9%, and mining and quarrying down by 5.0%.

And construction contracted, with output down by 1.8% in the month.

Inflation in America is expected to hit a new 30-year high today, putting more pressure on the Federal Reserve to end its stimulus programme faster.

The cost of living is forecast to have surged by around 6.8% per year in November, beating the 6.2% seen in October, and the fastest pace since the early 1980s.

With the Federal Reserve due to meet next week, there is some concern that a really hot number today could prompt the FOMC to go accelerate its tapering program more rapidly, from the current $10bn of US treasuries and $5bn of mortgage-backed securities that it started last month, in an attempt to give themselves more optionality in 2022 when it comes to raising rates.

Currently markets are pricing the prospect of a doubling of the taper next week, and any number that hints at a bigger amount next week could prompt some choppiness.

The fate of one of the UK’s oldest and largest mutual insurers will be decided on Friday as LV= members cast their ballots on a controversial takeover by US private equity firm Bain Capital.

LV=’s leadership insists that the £530m deal is in its members’ best interests and will secure much-need capital. But, members, campaigners and politicians fear transferring power to an American private equity firm will put an emphasis on short-term profits, at the expense of customer service and returns for members.