Economy

The Consumer Price Index picked up by 8.6 percent, as price increases climbed at the fastest pace in more than 40 years.A surge in prices in May delivered a blow to President Biden and underscored the immense challenge facing the Federal Reserve as inflation, which many economists had expected to show signs of cooling, instead reaccelerated to climb at its fastest pace since late 1981.Consumer prices rose 8.6 percent from a year earlier and 1 percent from April — a monthly increase that was more rapid than economists had predicted and about triple the previous pace. The pickup partly reflected surging gas costs, but even with volatile food and fuel prices stripped out the climb was 0.6 percent, a brisk monthly rate that matched April’s reading.Friday’s Consumer Price Index report offered more reason for worry than comfort for Fed officials, who are watching for signs that inflation is cooling on a monthly basis as they try to guide price increases back down to their goal. A broad array of products and services, including rents, gas, used cars and food, are becoming sharply more expensive, making this bout of inflation painful for consumers and suggesting that it might have staying power. Policymakers aim for 2 percent inflation over time using a different but related index, which is also elevated.The quick pace of inflation increases the odds that the Fed, which is already trying to cool the economy by raising borrowing costs, will have to move more aggressively and inflict some pain to temper consumer and business demand. The central bank is widely expected to raise rates half a percentage point at its meeting next week and again in July. But Friday’s data prompted a number of economists to pencil in another big rate increase in September. A more active Fed would increase the chances of a marked pullback in growth or even a recession. More

NEW YORK (Reuters) -Blistering inflation is threatening to reignite twin declines in U.S. stocks and bonds, leaving investors with few places to hide from a Federal Reserve that appears headed for its most aggressive policy tightening in decades. Friday gave a hint of what investors may see in coming weeks. The benchmark S&P 500 index fell nearly 3% while yields on the benchmark 10-year Treasury hit their highest level since early May after stronger-than-expected inflation data ramped up forecasts for more aggressive Fed rate hikes later this year. Bond yields move inversely to prices.”Today, the inflation data was disappointing. Many hopes for a peak are now dashed,” said Ryan Detrick, chief market strategist at LPL Financial (NASDAQ:LPLA). “The fears over inflation and the potential impact of profits in Corporate America are adding to the worries for investors here.”Stocks and bonds have fallen in lockstep for most of the year as tighter Fed policy lifted yields and dried up risk appetite, pummeling investors who had counted on a mix of the two assets to buffer declines in their portfolios.Those moves partially reversed over the last few weeks on hopes that a potential peak in inflation would allow the Fed to turn less aggressive later this year.But with markets now betting policymakers will hike rates by at least 50 basis points in their next three meetings, expectations of a less hawkish Fed are fading and investors believe more declines are on the way.”Given that price pressures in the U.S. show little sign of easing, we doubt that the Fed will take its foot off the brakes anytime soon,” analysts at Capital Economics wrote on Friday. “We therefore suspect that more pain is yet in store for U.S. asset markets, with Treasury yields rising further and the stock market remaining under pressure.”The S&P is down 18.2% year-to-date, again approaching the 20% decline from record highs that many investors consider a bear market. Yields on 10-year U.S. government bonds – a benchmark for mortgage rates and other financial instruments – have more than doubled.Phil Orlando, chief equity market strategist at Federated Hermes (NYSE:FHI), has beefed up cash positions in the portfolios he manages to 6% – the largest allocation he has ever held – while cutting holdings in bonds. In equity markets, he is overweight the sectors expected to benefit from rising prices, such as energy.”You have a very difficult picture for financial markets for the next several months,” he said. “Investors (have) to accept that the consensus view was wrong and inflation is still a problem.”Orlando sees fears of stagflation – a period of slowing growth and high inflation – as a key market driver. Overall, 77% of fund managers expect stagflation in the global economy over the next 12 months, the highest level since August 2008, according to a survey by BoFA Global Research taken before Friday’s inflation data. HAWKISH VIEWSFriday’s white-hot print – which showed consumer prices rising 8.6% in May – is pushing some Wall Street banks to raise forecasts for how much the Fed will need to hike rates to stanch inflation in coming months, potentially maximizing the pain for investors. Barclays (LON:BARC) now sees policymakers delivering their first 75- basis-point increase in 28 years when they meet next week, while Goldman Sachs (NYSE:GS) strategists forecast 50-basis-point hikes at each of the next three meetings. Prices of Fed funds futures contracts on Friday reflected better-than-even odds of a 75-basis-point rate hike by July, with a one-in-five chance of that occurring next week – up from one-in-20 before the inflation report. The Fed has already raised rates by 75 basis points this year.[FEDWATCH]Meanwhile, few investors expect falling equity markets to knock the Fed from its inflation-fighting path. A BoFA Global Research poll taken before Friday’s CPI number showed that 34% of global bond investors believe the central bank will ignore equity weakness entirely, only pausing if markets become dysfunctional.Pramod Atluri, fixed income portfolio manager at Capital Group and principal investment officer on Bond Fund of America (BFA), is among the bond investors who have dialed back duration – which is a portfolio sensitivity to changes in interest rates – over the last few weeks.”I thought there was a reasonable chance that inflation had peaked at 8.5%, and we would be on a steady downward trend through the rest of this year. And that has not played out,” Atluri said. “We’re now back to a point where we’re wondering if two 50- basis-point hikes and maybe a third 50-basis-point hike is enough.” More

(Reuters) -Stubbornly hot U.S. inflation is fueling bets that the Federal Reserve will get more aggressive about trying to cool price pressures and even potentially ditch its own forward guidance by delivering a jumbo-sized interest rate hike in coming months. Fed policymakers had already all but promised half-point interest rate hikes at their meeting next week and again in late July, following May’s half-point hike and the start of balance sheet reductions this month. That would be more policy tightening in the space of three months than the Fed did in all of 2018.On Friday, traders of futures tied to the Fed policy rate began pricing in an even bolder path after U.S. Labor Department data showed sharply higher food and record gas prices pushed the consumer price index (CPI) up 8.6% last month from a year earlier. A separate University of Michigan survey showed longer-term inflation expectations rising to their highest since 2008.Prices of Fed funds futures contracts now reflect better-than-even odds of a 75-basis-point rate hike by July, with a one-in-four chance of that occurring next week — up from one-in-20 before the inflation report — and a policy rate in at least the 3.25%-3.5% range at year end.Yields on the two-year Treasury note, seen as a proxy for the Fed’s policy rate, topped 3% for the first time since 2008.”We believe that today’s inflation data – both the CPI and UMich inflation expectations – are game changers that will force the Fed to switch to a higher gear and front-load policy tightening,” wrote Jefferies’ Aneta Markowska, who joined economists at Barclays (LON:BARC) on Friday in forecasting a 75-basis-point rate hike at the Fed’s June 14-15 meeting. Most economists still expect a half-point hike next week, and more of the same at subsequent meetings through at least September if not further.Core CPI, which strips out volatile energy and food prices, rose 6% in May, down slightly from April’s 6.2% pace but far from the “clear and convincing” sign of cooling price pressures that Fed Chair Jerome Powell has said he needs to see before slowing rate hikes.”Any hopes that the Fed can ease up on the pace of rate hikes after the June and July meetings now seems to be a long shot,” wrote Bankrate chief financial analyst Greg McBride. Economists at Deutsche Bank (ETR:DBKGn) concurred, and said they now forecast rates to rise to 4.125% by mid-2023. Fed policymakers at the close of next week’s meeting will release their own best guesses of how high they’ll need to lift short-term rates. They’ll also provide forecasts of how much unemployment – now at 3.6% – may need to rise before the economy slows enough to reduce inflation.In recent weeks some had expressed the hope that by September their own rate hikes, along with easing supply chain pressures and an expected shift in household spending away from scarce goods and toward services, would have started to ease price pressures and allowed them to downshift to smaller rate hikes. Friday’s inflation report suggested the opposite. Used car prices, which had been sinking, reversed course and rose 1.8% from the prior month; airline fares rose by 12.6% from the prior month and 37.8% from a year earlier. Prices for shelter – where trends tend to be particularly persistent – rose 5.5%, the biggest jump in more than 30 years. The Fed’s current policy rate target is now 0.75%-1%. Fed officials want to get it higher without undermining a historically tight labor market and sending the economy into recession, but accelerating inflation will make that a hard task.”These are ugly numbers. … I’d say we’ll probably be in a recession in the fourth quarter of this year with confirmation in the second quarter of 2023,” said Peter Cardillo, chief market economist at Spartan Capital Securities. More

The visit to the nation’s busiest entry point for goods comes as President Biden struggles to show progress on resolving supply chain issues that are fueling inflation.LOS ANGELES — President Biden on Friday defended his administration’s efforts to deal with inflation, just hours after a new report showed a surprise spike in prices that puts new pressure on the White House to ease the burden on consumers.Mr. Biden used the Port of Los Angeles as a backdrop to highlight his fight against inflation, delivering a speech about how his team has tried to speed up the delivery of goods disrupted by the coronavirus pandemic.“The job market is the strongest it’s been since World War II, notwithstanding inflation,” Mr. Biden said, standing on the battleship Iowa, a decommissioned warship that has been turned into a museum.With shipping containers piled up behind him, Mr. Biden emphasized that his administration had taken action last year to reduce congestion at ports, allowing 97 percent of all packages to be delivered on time during the holiday shopping season.But six months later, serious problems remain and persistent inflation has become a major political liability for Mr. Biden.The war in Ukraine has disrupted flows of food, fuel and minerals, adding to pandemic-related shortages and pushing inflation to multidecade highs. Data released on Friday morning showed inflation picking up again, rising 1 percent from the previous month. Compared with one year ago, consumer prices rose 8.6 percent, the largest annual increase since 1981.While some clogs in the supply chain look to be clearing, analysts say that trend may yet stall — or even reverse — in the months to come, as retailers enter a busier fall season and dockworkers on the West Coast renegotiate a labor contract that could lead to work slowdowns or a strike.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Greedflation: Some experts contend that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.For Investors: At last, interest rates for money market funds have started to rise. But inflation means that in real terms, you’re still losing money.Mr. Biden said he understands that Americans are anxious.“They are anxious for good reason,” he said. But he stressed that inflation is largely the result of increases in the price of gasoline and food, and he blamed the price hikes in those goods on Russia’s invasion of Ukraine.Mr. Biden argued that large price increases in the United States were part of a global problem with inflation and that Americans were in better shape than their counterparts elsewhere because of a strong jobs market and a declining budget deficit.He also lashed out at nine shipping companies that he said had used the global economic situation to increase prices by 1,000 percent, artificially adding to the cost of goods around the world. He did not name the companies.But he said they “have raised their prices by as much as 1,000 percent.”He called on Congress to crack down on shipping companies that raise prices.“The rip-off is over,” he said.Mr. Biden is correct that soaring inflation is a global problem. In a note to clients on Friday, Deutsche Bank Research said the United States ranked 48th for its inflation rate on a list of 111 countries, just above the middle of the pack.But that is little comfort to U.S. households struggling with rising costs.Analysts say the U.S. logistics industry is heading into its busier fall season, when retailers bring in products for back-to-school shopping and the holidays. Chinese exports are also on the rise as an extended coronavirus lockdown lifts in Shanghai.And, most crucially, dockworkers on the West Coast are renegotiating a labor contract with port terminal operators that expires at the end of this month. If they fail to reach an agreement, West Coast ports may see slowdowns or shutdowns that would delay deliveries and add to supply chain gridlock.Over the past two decades, labor negotiations led to at least three such slowdowns or stoppages that resulted in delays. In recent weeks, some companies that typically ship into the West Coast have begun routing some goods to the East or Gulf Coasts to try to avoid any logjams.Gene Seroka, the executive director of the Port of Los Angeles, said he expected labor talks to go beyond the July 1 contract expiry date, but downplayed the risks to trade.“It’s important to know, with all this cargo on the way, the rank-and-file dockworkers will be out on the job every day,” he said.“And the employers know they’ve got to get these products to market,” he added. “So we’re going to give these people some room. Let them negotiate in their space, and the rest of us are going to work on keeping the cargo and the economy moving.”Dockworkers on the West Coast, including at the Port of Los Angeles, are renegotiating a labor contract with port terminal operators that expires at the end of this month. Failure to reach an agreement could further delay deliveries.Stella Kalinina for The New York TimesMr. Biden has kept close relationships with labor unions and may hesitate to put pressure on dockworkers to conclude any talks. But a work slowdown or strike would be bad news for the administration, which has frequently come under attack about rising prices.By some metrics, supply chain pressures have been easing in recent weeks. The average global price to ship a 40-foot container of goods fell to $7,370 as of June 3, down from a peak of more than $11,000 in September, though that was still five times higher than before the pandemic began, according to the Freightos Baltic Index.Inflation F.A.Q.Card 1 of 5What is inflation? More

By Jason Hovet(Reuters) -Czech headline inflation soared to 16% in May, above expectations, to hit a nearly 30-year high, statistics office data showed on Friday.The data – above the central bank’s forecast of 14.9% – added to bets the Czech National Bank would deliver another hefty interest rate hike when the board meets under its current composition for a final time this month.Markets are now pricing more than a 100-basis-point rate hike to take the base rate well above 6% on June 22, before three of seven members’ terms end.”After this figure, I believe the bank will go for a big hike, not just a 75 basis point move already indicated. The question is how much more,” Pavel Sobisek, chief economist with UniCredit in Prague, said.The country’s president named three new members to the central bank board this week, easing market worries about a sharp dovish swing in the board.Czech central banker Ales Michl, who has opposed the 550 basis points in rate hikes delivered in the last year, will take over as governor from July and has sought rate stability.Central banks around central and eastern Europe have already sharply raised rates in the last year to combat surging inflation, as tight labour markets bolster consumer demand and allow companies to pass on rising costs.Czech inflation has been stronger than in some peers such as Hungary and Poland, where price caps or other anti-inflation measures have eased some of the burden of record commodity prices.Data on Friday, however, also showed Romania’s headline inflation reached 14.5%, providing more evidence interest rates there will rise more.In Romania, the central bank said in May it would not allow the interest rate differential to its regional peers to widen further and raised its benchmark interest rate by a bigger-than-expected 75 basis points to 3.75%, its sixth consecutive hike.”After the (National Bank of Poland) hiked its key rate by 75 bps (this week), we expect the (National Bank of Romania) to match it at the next rate setting meeting on July 6,” Erste Group Bank said. More

Wall Street’s S&P 500 and Nasdaq stock indices recorded their worst week since January as fresh evidence of red-hot inflation and expectations of an aggressive central bank response led to big losses on Thursday and Friday. The broad-based S&P 500 fell 5.1 per cent this week, while the tech-heavy Nasdaq Composite, which is stacked with interest rate-sensitive growth stocks, dropped 5.6 per cent. Friday’s losses for the S&P and Nasdaq were 2.9 per cent and 3.5 per cent, respectively. The US government reported on Friday that consumer prices had risen at an annual pace of 8.6 per cent in May, above April’s 8.3 per cent reading and exceeding economists’ forecasts as prices for food, energy and shelter all increased. The persistent evidence of inflation drove fears that the Federal Reserve will be forced to raise interest rates strongly and steadily in order to slow down economic growth. On Thursday, markets were rattled after the European Central Bank spelt out its own plans for tightening monetary policy.The ECB, which has long been one of the world’s most accommodative central banks, signalled that it may lift its main deposit rate above zero in September, which would be its first departure from negative interest rates in eight years. It also said that it would end net purchases of member states’ debt, sparking fears about financial stress for the bloc’s weaker economies.As Wall Street equities fell on Friday, the yield on the two-year Treasury note, which moves with interest rate expectations, rose above 3 per cent. The last time the two-year note surpassed this psychologically significant level was in 2008. Meanwhile, the yield on the five-year Treasury surpassed the yield on the 30-year bond, an indication the market believes that the Fed’s campaign of raising rates could tip the US economy into recession. “I don’t see inflation subsiding at all. It is going to be very, very tough for the numbers to actually dissipate in the future . . . I think by the autumn we’re going to be dealing with a much slower economy,” said Tom di Galoma, managing director at Seaport Global Holdings.“Markets are trying to get ahead of more Fed tightening — that’s what’s going on with the equity market,” he said. The Fed is widely expected to raise its main interest rate by a further 0.5 percentage points at its policy meeting next week. At the central bank’s May meeting, chair Jay Powell had set the stage for half-point rises in both June and July, but some questions remained about whether the Fed would continue at that pace at its meeting in September. The futures market now expects the Fed’s benchmark interest rate to be 3.2 per cent by year end, implying half-point increases at the Fed’s next four meetings — June, July, September and November — plus a quarter-point increase in December. With the prospect of a much tighter monetary policy, the dollar index, which measures the US currency against a basket of six rivals, rose to its highest level since mid-May as investors sought out haven assets. Earlier in the day Europe’s regional Stoxx 600 share index dropped 2.7 per cent, also hit by worries about the US outlook along with the effects of eurozone interest rate rises. “The message for the markets is that the priority now is quashing inflation, it’s not about growth,” said Paul O’Connor, head of the UK-based multi-asset team at Janus Henderson. Germany’s 10-year government bond, which serves as a benchmark for borrowing rates in the region, rose 0.09 percentage points to 1.51 per cent, its highest level since 2014. Italy’s 10-year bond yield rose by 0.16 percentage points to 3.75 per cent, more than triple its level at the start of the year.In Asia, Hong Kong’s Hang Seng index traded flat and Tokyo’s Nikkei 225 fell 1.5 per cent. Mainland China’s CSI 300 rose 1.5 per cent. More

(Reuters) – When plaintiffs lawyers in a derivative suit against Pinterest (NYSE:PINS) Inc board members asked for approval of their $5.4 million fee request last April, they told the judge they deserved twice their lodestar bills because they’d obtained significant corporate governance reforms that would make the company more diverse and inclusive, enhancing its long-term value for shareholders.In an order issued on Thursday, U.S. District Judge William Alsup of San Francisco told the firms to prove it.Alsup granted final approval to the settlement, in which Pinterest has agreed to commit $50 million to several diversity initiatives that vest the board with ultimate responsibility for both improving Pinterest’s corporate culture and assuring that the online image sharing service offers users more diverse responses to their search queries. The judge awarded Cohen Milstein Sellers & Toll, Renne Public Law Group, Bottini & Bottini, and Weiss Law $2.5 million in fees – about $200,000 less than their lodestar billings and less than half of what they requested.But that award may go up if plaintiffs’ lawyers can show Alsup over the next two years that Pinterest is living up to the settlement agreement and that the reforms shareholders obtained in the derivative deal have resulted in an actual benefit to the company.To that end, the approval order requires Cohen Milstein and the other firms to appoint lawyers “to enforce the settlement terms and police the corporation.” Alsup directed shareholders to file biannual reports documenting “how much progress has actually been made (or not made)” in attaining the goals laid out in the settlement agreement. If he likes what he sees over those two years, Alsup said, he will grant more fees to shareholder counsel.I reached out to both plaintiffs’ lawyer Julie Reiser of Cohen Milstein and Pinterest counsel Boris Feldman of Freshfields Bruckhaus Deringer but neither offered comment on the extremely unusual approval order – the first, as far as I know, in which a judge has partially conditioned fees in a derivative case on the success of corporate governance reforms. (Feldman said the same thing at a May 26 final approval hearing https://tmsnrt.rs/3xNQVBL, telling Alsup that he was not aware of any other derivative case in which the fee award was “contingent on future events.”)Alsup has been leery of the value of the Pinterest governance reforms since shareholder lawyers first asked for preliminary approval of the settlement – billed as the first derivative deal to require a corporate board to oversee audits of the company’s diversity and inclusion efforts — last November. My Reuters colleague Jody Godoy covered the preliminary approval hearing Alsup oversaw last January, in which the judge said shareholder lawyers too often tout “cosmetic improvements” and then ride “into the sunset” without assuring that they’ve achieved any real change.Alsup was particularly concerned in this case because Pinterest’s board had already adopted several policies intended to improve corporate culture before shareholders settled the derivative suit. The board brought in Wilmer Cutler Pickering Hale and Dorr to conduct an internal investigation in 2020, after high-ranking women at the company stepped forward with allegations of pervasive race and gender discrimination. Following a six-month probe, the company said it would (among other things) revamp training, set new diversity goals and partner with the NAACP to create an inclusion advisory council.Shareholder lawyers persuaded the judge to grant preliminary approval in February, arguing that their proposed settlement added considerably to the board’s own initiatives by, for instance, requiring the company to invest $50 million in diversity programs and imposing oversight responsibility on the board itself. Plaintiffs lawyers sounded similar themes in April, when they moved for a $5.4 million fee award. That amount, they said, was only 10.75% of the $50 million Pinterest had pledged to spend on corporate governance.At the final approval hearing last month, the judge made it clear that he would base fees on lodestar billings, not the $50 million budgeted for reforms.“There’s no money changing hands here,” he told Reiser of Cohen Milstein. “That’s what concerns me. And they say they will allocate, in the future $50 million, over 10 years. We have no way of knowing whether that’s going to happen.”Pinterest lawyer Feldman told Alsup that the company considered the shareholders’ fee request reasonable. Feldman also pushed back when the judge floated the idea of a 10-year monitoring program that would allow him to keep tabs on the company’s compliance.That would be “inappropriate,” Feldman said. “You shouldn’t retain 10 years of jurisdiction over a consensual settlement between private parties with no — no one died here. No towns were burnt down,” he continued. “The court, respectfully, should not be our corporate overseer for the next 10 years.”Alsup said at the conclusion of the May 26 hearing that he still had doubts about approving the settlement without a mechanism for him to evaluate the benefits of the governance reforms. “The easy thing to do would be to rubber-stamp this,” he said. “ (But) I’ve seen too many derivative cases, and I know the abuse.” He advised the two sides to add a monitoring component to the settlement.In a post-hearing brief, plaintiffs lawyers said they’d reached a deal with Pinterest to allow them to police the settlement for two years, with regular reports to the judge on the company’s progress.Alsup groused in the final approval order that the settlement gave Pinterest 10 years to invest $50 million in diversity programs, so the two-year monitoring feature would leave the company “unpoliced” for eight years. He nonetheless approved the settlement.Alsup is, by his own admission at the May 26 approval hearing, more of a stickler on shareholder settlements than most judges. It will be interesting to see if any other courts follow his lead on requiring proof that corporate reforms have accomplished something before rewarding plaintiffs lawyers for obtaining them. More

As Britain’s household energy bills continue to soar, mother-of-three Leah Shields faces an excruciating choice. She has to decide whether she can afford to go outside.“I’m disabled and I use a power chair when I go out of the house,” said the 38-year-old former hairdresser, who no longer works due to multiple health conditions, including osteoporosis. “Some days I’m having to sit and think: well, we need the electricity because we have two small children. When it comes to powering my power chair, I have to decide if it’s worth charging it, or do I save the electricity for my kids so it doesn’t go off.”Leah’s is one of 4.5mn households in the UK with a prepayment meter, meaning she has to pay in advance for any energy she consumes, as well as paying a higher unit price. If she can’t afford to top up, it literally means lights out. Plus, in her case, being confined to the house.

Leah Shields powers up her wheelchair © Ian Forsyth/FT

The cost of electricity and gas will jump again in October with the next energy price cap increase coinciding with peak winter usage, meaning it will cost the average prepayment customer more than £350 a month to heat and power their homes.Energy bosses have predicted that by this autumn, as many as four in 10 households could be in fuel poverty, spending more than 10 per cent of their disposable income on energy bills. Leah and her family, who live in Darlington, in the north east of England, use Bread and Butter Thing, a local food charity, to top up their store cupboards. But when it comes to energy, they have to choose. Leah has had no gas, which runs her heating, for three weeks, prioritising electricity instead. She had, until recently, been putting £20 on to the meter every Monday. “Now it’s at least £40 a week and we top it up on Monday and Thursday or Friday. We did try to pay quarterly and it was just a no go. The bills would come in and we’d have difficulty paying it back off.”For those on low incomes, soaring energy bills either mean extreme energy rationing or living for extended periods of time without gas or electricity.Before the energy crisis, Citizens Advice estimated 400,000 people in the UK were regularly “self disconnecting” — the industry term for living without energy — a figure it accepted would be significantly higher today. During the past year, the charity’s helpline has recorded a 684 per cent increase in calls from people who cannot afford to top up their prepayment meters. Currently it is taking 45 such calls a day.Fay Atkinson, 46, is one of those getting help from the CAB. Living in draughty social housing in the town of Clayton-le-Moors, in the north west of England, she confines herself to one room as far as she can and tries to stop up the gaps under the doors with tea towels.“I’m living hand to mouth,” she said. “£5 on the meter would last me two and a half days, now it’s lasting me a day. I live in one room and only turn the lights on if I’ve got to go to the bathroom or if I have to go downstairs — the only light I’m getting otherwise is off the TV. If it weren’t for food banks I’d be starving.”Like Leah, Fay’s health — she had three heart attacks in her late 30s — means she struggles to work. When she does, she earns minimum wage. “So even if I were working I’d still be scraping the bottom of the barrel.”She said she was “on the brink” of becoming homeless because she can’t afford to pay her rent, adding wryly: “Although I guess gas and electricity wouldn’t be a problem any more.” Of the thousands of people like Fay who approach the CAB for help each year, only 9 per cent said they would contact their supplier if they ran out of credit.“It’s a very private thing to admit you’re struggling and need help,” said Matthew Cole, head of the Fuel Bank Foundation, a charity providing emergency credit and support for people who run out of power. “We’re like a food bank, but for energy.”Matthew Cole: ‘Nearly two-thirds of the people we’re helping are in work’ © Anna Gordon/FTFuel Bank is on course to help a record 210,000 people this financial year; the limit of the charity’s current funding levels. Yet Cole estimated that for every person accessing help in the form of top-up vouchers, four more are in need of it. “Nearly two-thirds of the people we’re helping are in work,” he said, adding that pensioners make up a large part of the third not working. “In a good month they’ll get to the 25th before they run out, in a bad month it will be the 18th. What scares me is that it’s normalising being in poverty.” Operating from 500 centres across the UK, Fuel Bank referrals come via the charity’s 175 partners, which include debt charities, local councils and food banks, where anyone asking for a “cold pack” — food that does not need to be cooked — is the trigger. Cole is aware of one food bank in Birkenhead where this applied to 90 per cent of users. Fuel Bank payment vouchers © Anna Gordon/FTMany low-income households have been switched on to prepayment meters by their supplier as a debt management tool, so self-disconnection “becomes the customer’s problem, not the energy company’s problem”, said Andy Shaw, a debt advice policy officer with StepChange. Encountering families living without power is not uncommon in debt advice, but he added: “It’s having these conversations in the summer that’s really unusual.” Charities said the families they are helping are among the least likely to have received the £150 council tax rebate that the government had promised earlier this year would arrive in April, as so few of them pay via direct debit. Instead, they must wait until their local council designs a way for them to apply for the cash, which could mean waiting till September. Cole welcomed the government’s £15bn aid package announced last month but feared it would will not be enough for the poorest. “People will die of the cold this winter” was his stark assessment.“Most kids are praying for a white Christmas because they want to play in the snow. You won’t get that with a family in fuel poverty — they’ll be praying for a mild winter.” More