Aurelia Butler

By Ana ManoSAO PAULO (Reuters) – The Biden administration is not doing enough to forge a long-term alliance with Brazil, Myron Brilliant, the U.S. Chamber of Commerce’s head of the international affairs division, told a press conference in Sao Paulo on Thursday. “In my candid view, I don’t think the Biden administration is doing enough to focus on this region,” he said of the world’s ninth largest economy, adding part of the reason is the U.S. domestic agenda. Brilliant said the lack of U.S. engagement across Latin America means “opportunities are not developed (nor is a) long-term strategic plan in the way that we would hope.”The absence of the U.S. has paved the way for other partners to liaise and do business with Brazil.”What we have seen in the last decade is a significant rise of Chinese investment and engagement in the region,” Brilliant said. “We are also seeing Russian engagement. We would say that the U.S. has to be present.”The U.S. is Brazil’s second most important trade partner, behind China. The difference is that Brazil runs a trade surplus with the Asian country, and a deficit with the U.S.Brazil and the U.S. compete as exporters of agriculture commodities like soy, meat and corn. In the first quarter of the year, Brazil ran a $3.8 billion trade deficit with the U.S. and $4.7 billion surplus with China, according to Brazilian government data. The U.S. accounted for about 11% of Brazil’s overall exports in the period while China was almost 28%, the data showed.”Defining trade in terms of deficit and surplus is a mistake,” Brilliant said. “Important for us is to have a level playing field.” More

Underlying wage growth in the UK is weaker than headline official statistics show because pay increases have been boosted by the end of the furlough scheme, according to a think-tank.The Resolution Foundation says pay rises are similar to pre-pandemic levels despite soaring prices, reducing the need for the Bank of England to increase interest rates to curb inflationary pressures.In January, nominal pay excluding bonuses grew by an annual rate of 4.1 per cent compared with an average of 2 per cent in the decade prior to the pandemic, according to data from the Office for National Statistics.But the Resolution Foundation’s analysis, published on Saturday, shows the official figures were boosted by the end of the furlough scheme in September. Furloughed workers received 80 per cent or less of their usual pay, thereby boosting growth rates as they returned to full pay. After adjusting for the furlough schemes and for factors such as the rise in the number of low-paid workers as hospitality and retail reopened, underlying wage growth averaged only 2.7 per cent in 2021, the same as in 2019, before the pandemic. This is despite inflation now running at a 30-year high, suggesting that workers are taking the hit from rising consumer prices. The think-tank calculated that for the last quarter of 2021 about 1 percentage point of the wage growth was due to furloughed workers moving back on to their full pay.Nye Cominetti, senior economist at the Resolution Foundation, said that headline figures “give a misleading impression of pay growth. Given the tightness of the labour market, pay growth is best seen as normal rather than exceptional, once the impact of the end of the furlough scheme is taken into account,” he added.The ONS is well aware of the issues and warned that “interpreting average earnings data is difficult at the moment”. The effects of the furlough scheme are waning as the number of furloughed workers decreased last year, but they will last until the autumn because growth this year is calculated comparing it with 2021. This “matters hugely”, argued Cominetti because the pace of wage growth is a key factor for the Bank of England when setting monetary policy, particularly at present when the country faces exceptional price pressures.The concern for policymakers is that high inflation expectations and a tight labour market are prompting a wage spiral that could result in a more prolonged period of high inflation. The UK labour market is indeed short of workers. The unemployment rate is close to record lows, the unemployment-to-vacancies ratio is the lowest on record, and workers are moving jobs voluntarily at record-high rates.

However, the findings of the Resolution Foundation show that underlying wage growth is not faster than when the labour market was in similar conditions in 2019, despite much higher price pressures. Similar modelling by the Bank of England, but based on the private sector only, showed higher underlying wage growth than the Resolution Foundation. However, in both analyses “there is no evidence yet of accelerating pay growth to match fast-rising prices”, the think-tank noted.The Resolution Foundation also estimated that nominal wages would grow by an average of 5 per cent in 2022. This means that “with inflation set to reach 8 per cent in the coming months, most workers’ earnings will fall in real terms — even with a 6.6 per cent rise in the minimum wage — further squeezing living standards in the months ahead”, said Cominetti. More

The price of a sandwich, a lunchtime staple eaten by millions across the UK every week, is poised to reach fresh highs as food costs soar, along with bills for labour, packaging and energy.War in Ukraine and the resetting of supply chains following pandemic lockdowns mean prices for the ingredients in one of the UK’s most popular sandwiches — the BLT (bacon, lettuce and tomato) — are up by 56 per cent on average since 1 January 2019, according to data compiled by commodity research group Mintec and the Financial Times.That rise is led by a huge spike in the price of sunflower oil, of which Ukraine is the world’s largest exporter. But prices for other ingredients are also surging: wheat and tomatoes have each increased by 63 per cent since the start of 2019, while the cost of lettuce has increased by nearly a quarter. Pork is the only ingredient to have remained level.Food manufacturers and retailers say they have never had to contend with such a rapid surge in all of their input costs. The sandwich, whose assembly and distribution requires fresh ingredients, large factories, labour and prompt, chilled transport, is emblematic of the struggle they face. The rise in the cost of lunch is set to become yet another burden on consumers’ wallets, as well as adding strain on manufacturers just as they start to recover from the worst of Covid-19.“Sandwiches are a barometer to the economy in that sense,” said Jim Winship, director of the British Sandwich and Food To Go Association, adding that record prices for key ingredients would send what consumer fork out for sandwiches to new highs.Shaun Allen, chief executive of food procurement specialist Prestige Purchasing, warned that “a protracted conflict, coupled with long-term sanctions on Russia’s economy, might well raise inflation to levels not seen for a generation”.Not only is Ukraine a key supplier of sunflower oil, but Russia and Ukraine together supply around a quarter of the world’s wheat, the main ingredient in bread. Sandwich makers are also contending with far higher energy costs to run factories — some in the industry say they have doubled in the past few months — and rising labour costs due to staff shortages and increases in the national living wage. Winship said sandwich makers had also been wrestling with supply problems. In the chilly spring months, producers are struggling to heat polytunnels to grow fresh salad items. A lorry drivers’ strike last month in Spain, a key exporter of tomatoes and lettuce, exacerbated challenges.Pork is the only BLT ingredient yet to show dramatic rises. In late 2021 and early 2022, European pig prices declined steeply after African swine fever in Germany prevented the country exporting to China. In the UK the downward pressure was worsened by a surplus of pigs on farms resulting from labour shortages in abattoirs.But prices have started to increase in recent weeks after a reduction in the size of European breeding herds. The rise has been amplified by increasing input costs, according to the National Pig Association, but has yet to feed through into prices for pork. Prices for packaging — which accounts for around 10 to 12 per cent of a sandwich’s production cost, according to Sam Page, managing director at sandwich maker Simply Lunch — have shot up around 25 per cent. Simply Lunch now charges retailers around £1.70 for a sandwich, approximately 30 per cent more than before Covid.Kantar, the market data business, said the price of a pre-packed sandwich for consumers was up 8 per cent in the 12 weeks to February 20 this year compared with the same period in 2020. Tesco, Co-op and Boots have increased the cost of their “meal deals”, which generally include a sandwich, drink and snack, by between 5 and 16 per cent this year. Similar inflationary forces are at work on sandwiches made fresh on-site by companies such as Pret A Manger.The worst of the price rises are yet to reach consumers, according to Clive Black, analyst at Shore Capital. But he warned: “Supply chains really can’t accommodate on a sustained basis this amount of cost inflation if they don’t pass it on [to consumers].”Winship said manufacturers have “no choice” but to charge more for sandwiches: “There was some resistance, I think, from retailers to start with, to price rises, but I think everyone’s accepted now that it is inevitable and unavoidable.”Workers prepare sandwiches in an M&S store in 1955. The ready-made sandwich has become a staple for UK workers © Charles Hewitt/Picture Post/Hulton Archive/Getty ImagesThere are few ways to mitigate the cost crunch in a labour-intensive industry that runs on tight margins and timeframes. To make one BLT sandwich requires 17 people on the production line and wage costs have gone up between 5 and 25 per cent depending on the role, according to Page.“We are looking at ways to automate what we are doing [but it] is fairly limited because of the amount of raw materials that we use and the delicacy of the product. It’s quite difficult to get a robot to put lettuce into a sandwich,” he said.Labour shortages have meant that most manufacturers have probably suffered a 10 to 15 per cent reduction in capacity, said Black.Greencore, the UK’s largest sandwich maker, declined to comment in detail, but then-chief executive Patrick Coveney recently highlighted more limited ranges as a result of previous labour shortages at points since these began last year.Dan Silverston, managing director at Soho Sandwich, which produces about 300,000 sandwiches a week, said the entire process was complex: “It’s a high-risk business — it’s not just getting bread and putting something on it. It’s about yields, taste panels, making sure allergens are monitored, working with supply chains to make sure there is consistent supply.”The period of surging costs has come just as demand for sandwiches rebounds following the initial phase of the pandemic.

Marks and Spencer, which sells 100mn sandwiches per year, said that after a dramatic drop in sales during the early lockdowns, demand returned to pre-pandemic levels in March. The BLT is the retailer’s most popular flavour and costs £3.30 after the price was increased in 2020 because of surging pork costs.Page said he fears there is a ceiling on how much people are willing to pay for a sandwich, which could make them untenable to produce. Meanwhile there is little that manufacturers can do to reduce the number of ingredients without consumers detecting a problem.But Winship argued that despite the inflationary pressure, past experience suggested more expensive sandwiches may sell well in a challenging economic environment.“In recessionary times we’ve seen that the premium end of the market has actually grown. People aren’t going out to restaurants, they have a good quality sandwich and stay at their desks,” he said.Additional reporting by Chelsea Bruce-Lockhart More