Aurelia Butler

Motoring organisations on Wednesday called on BP and the big four supermarkets to cut their petrol prices and provide greater help to Britons struggling with the cost of living crisis.The AA claimed BP — which unveiled its highest quarterly profits for 14 years on Tuesday — was charging “what they can get away with” at petrol stations, while the RAC accused Asda, Wm Morrison, Tesco and J Sainsbury of an “unwillingness to cut their prices to a more reasonable level”. The demand for fuel price cuts comes as the Bank of England is widely expected on Thursday to increase interest rates, possibly by half a percentage point, to curb surging inflation.The Resolution Foundation think-tank said it was “plausible” consumer price inflation could hit 15 per cent in the first quarter of next year, partly because of rising gas prices.Motoring organisations are concerned that fuel retailers are not fully passing on a recent fall in wholesale prices to their customers on garage forecourts.The RAC said wholesale petrol costs had fallen by 20p a litre since early June, following a drop in the value of crude oil, yet the average price paid for unleaded fuel by drivers had only decreased by 9p.Edmund King, AA president, said BP — which announced underlying earnings of $8.5bn for the second quarter — should use its profits to lower fuel prices, in a move that would trigger wider cuts on forecourts.“It is right to assume if a company is making so many billions, why are their profit margins at the pumps higher than other retailers,” he added. “Surely there is more to go around to help people out.”AA calculations show that BP prices last month averaged 191.17p per litre for petrol, higher than any other of the top 10 UK fuel retailers, including Shell and the big four supermarkets. The UK average was 188.43p. “If BP was more proactive in their pricing, it would mean that Shell and the others would follow suit, it would bring prices down, it would make them more competitive,” added King.

There are some 1,200 BP-branded service stations in Britain, although the energy company said it only sets the price of fuel at the 300 sites that it operates.BP said: “At our sites at which we control pricing, we aim to price competitively, taking into account local factors for each site, including competitors.”BP said on Tuesday it had no plans to make fuel price cuts as the company was set to pay an energy profits levy that the government announced in May to help ease the cost of living.Meanwhile the RAC pointed the finger at the big four supermarkets, which are responsible for about half the fuel sold to drivers.Supermarket executives insisted they bought their fuel further in advance than smaller independent forecourts so it took them longer to pass on both reductions — and increases — in wholesale prices.They also privately claimed their forecourts were still cheaper than those of the energy companies. Some groups, including Asda, have recently cut prices.The British Retail Consortium, a trade body that represents all the big supermarkets, said its members “understand the cost pressures facing motorists” and would pass on cost reductions “as they feed through the supply chain”.Rishi Sunak, the former chancellor who is running against foreign secretary Liz Truss to be the next Tory leader and prime minister, has previously called on companies to pass on falls in the cost of oil to consumers at the pumps. “That’s still his strong message,” said his spokeswoman.Sunak said in June, while still chancellor, that he would consider another cut to fuel duty after reducing it by 5p a litre in March.The UK competition regulator this summer launched a market study into fuel prices.The Competition and Markets Authority found “cause for concern” in a rise in refining margins — the difference between the price of crude and fuels such as petrol and diesel.Additional reporting by George Parker and Valentina Romei More

Good evening,An intervention from the IMF today has added fuel to the debate about how European governments should tackle the surge in energy prices and comes hot on the heels of announcements of soaring profits by oil and gas companies.The IMF said rising costs — up by 40 per cent in the eurozone and 57 per cent in the UK — should be passed on to consumers to encourage energy saving and a shift to greener power, but with targeted help for poorer households that are disproportionately affected by the increases.Existing measures include price caps in France, Spain and Portugal, electricity tax cuts in Germany and the Netherlands, energy subsidies in Italy and Greece, energy allowances in Germany and a windfall tax on North Sea companies in the UK. But with fossil fuels likely to remain expensive for some time, the IMF said governments “should let retail prices rise to promote energy conservation while protecting poorer households”. In many countries, the cost of mitigating price rises will pass 1.5 per cent of economic output this year, which is more expensive than offsetting increases for the bottom 20 to 40 per cent of households, the IMF said.The fund singled out the UK, along with Estonia, where living costs for the poorest fifth of households are expected to rise by about twice as much as costs for the wealthiest.Analysts predicted yesterday that UK energy bills would stay at “devastating” levels until at least 2024. The government’s price cap on 23mn household bills could hit £3,360 a year when the regulator Ofgem next updates it in October.In the meantime, a new report by the National Institute of Economic and Social Research think-tank urged the government to boost energy grants and benefits payments for at least six months when the new Ofgem ceiling takes effect. NIESR said the UK downturn would lead to more than 5mn households using up all their savings by 2024.Across the Channel, a 40 per cent jump in energy prices contributed to eurozone inflation hitting 8.9 per cent in July.Warnings from the business world are also coming thick and fast. New data yesterday highlighted how soaring energy and fuel costs were exacerbating cash flow pressures that have driven a large jump in corporate insolvencies in England and Wales. Retailers in France are already adapting practices to use less energy as well as preparing for potential shortages.Meanwhile, energy companies are reaping the benefit. BP reported its highest quarterly profit in 14 years of $8.5bn yesterday, but said it had no plans for fuel price cuts for motorists — unlike France’s TotalEnergies, which has promised some relief from September. ExxonMobil and Chevron also reported record quarterly profits, while Shell broke its profit record for the second quarter in a row and announced a $6bn share buyback.Latest newsPatrick Vallance, familiar to millions through coronavirus briefings, is to stand down as UK chief scientific adviser in April 2023 (Gov.uk)Airbus axes remaining A350 jet deal with Qatar Airways (Reuters)Morrisons joins Tesco and Sainsbury in cutting UK petrol prices (Bloomberg)For up-to-the-minute news updates, visit our live blogNeed to know: the economyThe visit to Taiwan by Nancy Pelosi, the US House of Representatives Speaker, continues to cause ructions with China. The trip is seen as a test of China’s resolve in deterring foreign support for Taipei. Initial reactions from Beijing include a block on the import of 2,000 food products from Taiwanese producers.Latest for the UK and EuropeUK services in July had their weakest performance since February 2021 as inflation hit demand, according to the S&P Global/Cips purchasing managers’ index. The PMI reading fell to 52.6 from 54.3 in June, where 50 marks the divide between activity expanding and contracting.German chancellor Olaf Scholz has backed a reprieve for Germany’s last nuclear power plants and blamed Russia for a turbine problem with the Nord Stream 1 gas pipeline. Europe stepped up imports of Russian diesel in July, highlighting the difficulties in implementing EU plans for a ban.A former official at the National Bank of Ukraine wrote in the Financial Times that Kyiv’s allies needed to increase their aid to $4bn-$5bn a month to help ward off economic calamity.Ukraine’s infrastructure minister Oleksander Kubrakov told the FT it would take months before grain exports would reach prewar levels and ease the pressure on global food supplies. The prospect of a reopening of the Black Sea corridor, along with global recession fears and record crops in Russia, have recently pushed down prices for agricultural commodities such as wheat.Inflation in Turkey has hit nearly 80 per cent, increasing pressure on the country’s central bank to raise interest rates despite resistance from president Recep Tayyip Erdoğan, who has rejected traditional economic theory that raising rates helps curb rising prices.Rising eurozone mortgage rates herald a potential slowdown in the bloc’s housing market, but property prices in the UK are still steaming ahead at an annual rate of 11 per cent, according to new data from Nationwide.Global latestOpec and its allies have agreed a small increase in oil production of 100,000 barrels a day, or just 0.1 per cent of global demand. The rise is likely to disappoint western capitals after overtures to the Saudis in recent week from presidents Joe Biden and Emmanuel Macron.Acting governor of the State Bank of Pakistan Murtaza Syed wrote in the FT that developing countries hit by debt problems would not forget if the rich world let them down in a moment of crisis.Need to know: businessBMW’s shares fell sharply today despite a positive earnings statement as it warned that sales would likely take a hit from the economic slowdown. Ferrari followed other luxury carmakers in reporting bumper profits and upgrading its annual earnings forecast. At the other end of the spending scale, the Lex column says the “lipstick effect” — where cash-strapped consumers splash out on a small luxury item — is helping Swiss chocolatier Lindt.Axa became one of the first insurers to detail the fallout from the Ukraine war, revealing losses of €300mn from stranded planes and damaged buildings. It was however still able to record higher than expected revenues and profits and announce a €1bn share buyback. French bank Société Générale said its exit from Russia had cost it €3.3bn as it swung to a €1.5bn loss in the second quarter.Germany’s Commerzbank has issued a stark warning over “a chain reaction with unforeseeable consequences” for the country’s economy and chemical industry if the gas shortage deepens.Robinhood, the company that promised to revolutionise stockbroking, is laying off almost a quarter of its staff as the retail trading bubble bursts.Hedge funds are set for one of their worst years on record after failing to offset sharp falls in equity and bond markets, especially those that had bet on the fast-growing companies that did well during the pandemic. Man Group, one of the largest, reported weaker than expected inflows and said clients were asking for more of their money back as the prospect of more market turbulence increases.Supply chain disruption is still good news for shippers. Maersk raised its profit forecast for the third time this year and said a “gradual normalisation” in freight rates was unlikely to happen before the fourth quarter. Constructing supply chains to favour political allies however is not the best way to solve current problems, argues Alan Beattie in the Trade Secrets newsletter.High booking prices boosted second-quarter revenues at Airbnb as the company capitalised on pent-up demand for travel. The average price per night on the platform was $163.74, lower than the previous quarter but still 40 per cent above pre-pandemic levels. The Lex column says investors should not underestimate people’s desire to travel after more than two years of Covid restrictions.Getting to that holiday spot, at least for those flying from the UK, could now be a bit trickier. BA has extended its suspension of Heathrow short-haul ticket sales, affecting the airline’s domestic and European routes as well as flights via Morocco and Cairo. Delphine Strauss looks at wider labour relations at Heathrow.There was better news across the Atlantic, where United Airlines, the US’s second-largest carrier, reported record quarterly revenues and its first profit since the pandemic began, despite a host of cancellations in May and June. Chief executive Scott Kirby warned that record fuel prices and the increasing possibility of a global recession still posed severe risks. The World of WorkThe FT’s Working It podcast discusses what companies can do to help their staff cope with the cost of living crisis, short of giving them double-digit pay deals to match inflation. The return to the office is also under threat from the rising cost of commuting.“It is often said that the pandemic split the world of work into those who could work at home and those who couldn’t, but in truth the virus mostly exposed cracks of inequality that were already there. The warming planet is likely to do the same,” says columnist Sarah O’Connor, arguing that employers need to do more to address risks to health and safety and productivity as global temperatures rise.Get the latest worldwide picture with our vaccine trackerSome good newsAs the threat of an insect apocalypse looms, a new wave of apps and AI-driven advances are helping gardeners encourages bees and butterflies back to their gardens. One online tool even allows the option of “pollinator vision”, letting you see your garden through the eyes of an insect.Innovate to pollinate: high-tech ways to welcome insects into your garden © Harriet Russell More

Hefty recent interest rate rises by the US Federal Reserve and European Central Bank highlight the concern among central bankers that high inflation could become entrenched and spiral further beyond their control. With many advanced economies facing the spectre of recession, monetary policymakers are grappling with an unenviable choice: raise rates gradually, which will more slowly push up the cost of credit for already overburdened households, or front-load them to put an anchor down on soaring prices. The Bank of England will confront this trade-off when it announces its next interest rate decision on Thursday.Since the BoE began lifting its pandemic-era stimulus in December with an initial 15 basis-point rise, it has raised rates in slow and steady quarter-point increments. The bulk of Monetary Policy Committee members have felt that fragile economic activity, amid a cost of living crisis, meant a half-point increase — its largest since 1995 — might be too aggressive. Yet with price pressures in the UK unlikely to ease off significantly in the near term, the BoE will fall further behind the curve on inflation if it fails to act more decisively.Price pressures have strengthened since the bank’s previous meeting, when it warned it may need to act more “forcefully” if inflation looks more persistent. June’s annual consumer price index reading was 9.4 per cent, a new 40-year high. Food and petrol prices continued to soar, and factory-gate inflation pressures also mounted, with producer prices rising to a 45-year high. After the wholesale gas price surged again, the cap on household energy prices is projected to rise in October by a startling 70 per cent, and remain high into 2024. This means inflation could peak at even more than the 11 per cent-plus the BoE had already pencilled in.At such heights the threat of “second-round” effects, where businesses push up prices and workers seek higher wages as household bills surge, becomes intense. Wages are not yet spiralling upwards uncontrollably. But at over 4 per cent, annual growth in regular pay is still above the roughly 3 per cent considered to be consistent with the bank’s 2 per cent inflation target — and unusually big bonuses and one-off payments mean total pay is growing even faster. Labour shortages will sustain wage pressures, while surveys show companies’ selling price expectations are still at elevated levels.The bank can do little directly to ward off internationally-driven fuel, food, and supply chain cost pressures. Yet with business and household price expectations crucial to how high price dynamics become embedded, the bank will face a credibility problem if it is not seen to be acting robustly. While interest rates are a crude tool for quashing inflation, a more forceful 50 bps rise — which markets largely expect and BoE governor Andrew Bailey has said is “on the table” — would act as an important signal to damp inflation concerns.Some may point to easing core inflation and surveys that show price expectations cooling as justification for less urgency, but upside risks to inflation remain. With other central banks shifting to larger rises, relatively lower UK interest rates could drive the pound weaker, raising imported inflation. The war in Ukraine means food and energy prices will remain volatile. And both Conservative leadership candidates are touting tax cuts that would add further fuel to the inflationary fire.Waiting for even clearer evidence of persistent inflation would already be too late. The MPC has to decide what is the bigger risk: putting downward pressure on economic activity now, or allowing price dynamics to get out of control, which would entail potentially more painful and damaging rises later on. More

The first grain ship to set sail from Ukraine in months was cleared to embark on the final leg of its journey after passing an inspection by a team of international monitors in Turkish waters.The Sierra Leone-flagged Razoni, carrying 26,000 tonnes of Ukrainian corn, left the northern entrance of Turkey’s Bosphorus strait on Wednesday and headed for the Lebanese port of Tripoli.Prior to its departure, the bulk carrier underwent an inspection by representatives from Russia, Ukraine, Turkey and the UN under the terms of a deal struck by Moscow and Kyiv aimed at easing a global food crisis.Russia had pushed for the inspection of ships going to and from Ukraine as part of the agreement to assuage concerns that they could be used to ferry weapons to the Ukrainian armed forces.Photographs shared by Turkey’s defence ministry, which along with the UN played a central role in brokering the deal, showed inspectors in white hard hats climbing up a rope ladder to board the vessel.Razoni left the Black Sea Port of Odesa on Monday morning after weeks of negotiations that culminated in an agreement under which Russia promised not to attack grain ships in exchange for a UN commitment that it would work to unblock the export of Russian food and fertiliser to global markets.After a journey that lasted almost 36 hours and involved navigating mine-laden waters, the vessel arrived safely at the northern entrance to the Bosphorus near Istanbul on Tuesday night.The inspectors carried out “a three-hour inspection”, according to a statement by the Joint Agency Coordination Centre for the grain deal.

It added that they were able to “discuss with the crew and gain valuable information on the vessel’s journey along the maritime humanitarian corridor” in the Black Sea, which is mined and is under the permanent threat of Russian missiles. At least 16 other ships are awaiting departure from Odesa as part of the deal, which the UN hopes will encourage grain traders and cargo companies to dispatch vessels to Ukraine. While Kyiv has welcomed the progress, Ukrainian officials have also voiced misgivings about Moscow’s willingness to stick to the agreement at a time when fighting continues and there is deep mistrust between the countries. US secretary of state Antony Blinken called the departure of the Razoni a “significant step”. But he also called on Russia to halt attacks on Ukrainian farmland, making it unusable and destroying agricultural infrastructure.

Video: Could protectionism make food insecurity even worse? | FT Food Revolution More