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    Britons Brace for More Hardship as Prices Soar Amid Inflation

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    Cutting back on meat. Choosing cheaper supermarket brands. Stockpiling soap. Soaring prices force more sacrifices.LONDON — Stacey Smith grabbed some boxes of tea from a low shelf of a London supermarket on Wednesday, and then phoned the neighbor who had asked her to buy them.“They have gone up 20 pence,” she said. “Do you still want them?”Her neighbor agreed to accept the price increase, something that Ms. Smith, a teaching assistant and a single mother of three, has been unable to do with her own shopping. After she bought the tea, she headed to Aldi, a cheaper supermarket, to shop for her family.In the past months, as food prices have soared in Britain, she has cut down on meat and relied on pasta and sauces instead. Her children have stopped attending swimming lessons, she has limited their trips to the fridge for snacks and she has turned down their requests for money to spend at the bowling alley.“We need that money for food,” said Ms. Smith, who makes 1,200 pounds (about $1,400) a month. “Before, we were keeping our head just above the water. Now, we are literally sinking.”In Britain, inflation rose 10.1 percent in July compared to a year earlier, with consumer prices growing at their fastest pace since 1982. Many Britons, especially the most vulnerable, who have borne the brunt of the effects of inflation, braced for more sacrifices: for saying “no” more often to their children, for making more trips to multiple supermarkets to find discounts, for joining lines at the food banks and for making more compromises to their health.Many Britons are concerned that their leaders have left the country rudderless during the growing economic crisis. The government is embroiled in a leadership transition, with Prime Minister Boris Johnson working out his last few weeks in Downing Street before a successor is announced on Sept. 5. Parliament itself is not in session, and vacation season is in full swing, with Mr. Johnson being spotted in Greece over the weekend — his second foreign holiday in recent weeks.In the meantime, residents are scrambling to cope, often forced to make hard choices.At Iceland, a low-cost supermarket with an emphasis on frozen food, Tainara Graciano, 51, a housekeeper in London, carried a basket with two cartons of eggs and discounted chicken nuggets that were expiring on the same day. She had cut back on bottled water since prices began spiraling up.“He drinks a lot,” she said of the water, looking at her 11-year-old son as he strolled by. Then she pointed at her half-empty basket and said, “Five months ago, I carried two of those.”Britons have been making more trips to multiple supermarkets to seek out lower prices.Andy Rain/EPA, via ShutterstockAcross the street, Arwen Joseph, 47, was shopping for house supplies at the low-cost store Poundland.Ms. Joseph, who is on government benefits and sometimes uses a food bank, said it had been harder to buy healthful food that was compatible with her allergies, which give her severe eczema. As a result, she has cut back on other items.“We used to have ice cream or bubble tea maybe once a week,” said her 9-year-old daughter, Georgia Gold. “Now we haven’t had it so much.”Volunteers at food banks say they have been caught off guard and are now struggling to keep up as more people arrive asking for help.Solomon Smith, who runs the Brixton Soup Kitchen in South London, which provides hot meals and other food bank services to those in need, said the number of people using the service had more than doubled in recent months.“People are telling us they haven’t eaten properly for days,” he said. “Some of them have been forced to go into shops to steal. Others don’t know if they should pay their gas bills or eat food.”The food bank itself has not escaped the inflation squeeze. It has had to cut back on hot meals and food purchases, and has seen public donations dry up, according to Mr. Smith.“We just don’t have enough to give to everyone,” he said, his voice wavering. “I don’t know what is going to happen next week.”People across Britain are confronting similar problems.At the Blackburn Food Bank, in the north of England, more people with full-time employment are turning up as wages have not kept up with the inflation.“People are very shocked that they have to be here,” said Gill Fourie, operations manager at Blackburn. “People don’t even have gas and electricity to cook,” she said, referring to mounting household energy prices which are forecast to climb to 3,500 pounds (about $4,240) a year in October, triple what they were a year ago. She added, however, that the facility continued to receive support from the community. Even people who are in less vulnerable situations have had to watch their wallets.“I would love to get some Mutti, but I cannot afford it,” said Melanie McHugh, an actress, as she looked at cans of tomato sauce at her local supermarket in south London. She said she was going to make shakshuka, a vegetable dish that could last for several days. She went for a cheaper brand of sauce.Ms. McHugh, who has stopped buying butter, also grabbed a lower cost brand of chorizo.“I am aware that I am lucky,” she said. “But I am also aware my habits have changed.”The British government has allocated £15 billion (about $18 billion) in benefits for the most vulnerable families. Ms. Smith, the mother of three, said she had received about 300 pounds this month. She has also stockpiled laundry soap, but said that did not ease her worries. She has started thinking of giving up her car and getting another job, as a cleaner, on weekends.“It’s not what I would like to do,” she said. “But you have to do what you need to survive.” More

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    Inflation Hits the British Breakfast Table With Rising Food Prices

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    From bread to butter to baked beans, a survey of typical breakfast items makes clear that there’s no relief from rising inflation for Britons when they sit down for their morning meal.LONDON — Britons can’t escape inflation. They’re reminded first thing every morning — when they tuck into breakfast.As soaring inflation takes its toll in the country — consumer prices rose in July 10.1 percent from the previous year, according to official statistics released on Wednesday — the prices for items associated with a basic breakfast in Britain have jumped.The squeeze isn’t just being felt at the breakfast table, either, with the overall rise in inflation being attributed in large part to higher food and drink prices across the board, according to data from the Office for National Statistics.Assosia, a retail research firm, compared prices from Britain’s four largest supermarket chains, and the data showed significant increases for branded items on the shelves on Tuesday, when compared with exactly one year ago, from bread to butter to baked beans. Here’s what that looks like (1 British pound = $1.20).Bread: The price of 800 grams (about 1.75 pounds) of Hovis soft medium slices of bread rose from an average of £1.05 to £1.20, an increase of 15 percent.Butter: Two hundred and fifty grams of Lurpak unsalted butter is now £2.50, up from £1.94, an increase of 29 percent.Eggs: Six large free-range eggs from the Happy Egg Co. now runs £1.97, compared to £1.72 a year ago, an increase of nearly 15 percent.Sausages: A package of eight Richmond Thick Sausages is now £2.26, a rise of 26 pence from a year ago, a 13 percent increase.Bacon: The price of 200 grams of Finnebrogue Artisan Naked bacon slices surged more than 32 percent, from £2.03 to £2.68.Baked Beans: A 415-gram can of Heinz Baked Beans went from 85 pence to £1.21, increasing almost 43 percent.Coffee: Two hundred grams of Nescafé instant coffee jumped from £4.56 to £5.25, up 15 percent.Tea: 80 bags of PG tips Original Biodegradable Black Tea rose a little less than 9 percent, going from £2.13 to £2.31. More

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    Bank of England raises rates to 1 percent amid recession worries.

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    As prices for energy, food and commodities rise after Russia’s invasion of Ukraine, the impact is being felt sharply around the world. In Britain, the central bank pushed interest rates to their highest level in 13 years on Thursday, in an effort to arrest rapidly rising prices even as the risk of recession is growing.The bank predicted that inflation would rise to its highest level in four decades in the final quarter of this year, and that the British economy would shrink by nearly 1 percent.“Global inflationary pressures have intensified sharply in the buildup to and following the invasion,” Andrew Bailey, the governor of the Bank of England, said on Thursday. “This has led to a material deterioration in the outlook,” he added, for both the global and British economies. On an annual basis, the economy would also shrink next year.The Bank of England raised interest rates to 1 percent from 0.75 percent, their highest level since 2009. Three members of the nine-person rate-setting committee wanted to take a more aggressive step and raise rates by half a percentage point. The Bank of England has raised rates at every policy meeting since December.Prices rose 7 percent in Britain in March from a year earlier, the fastest pace since 1992. The central bank predicts the inflation rate will peak above 10 percent in the last quarter of the year, when household energy bills will increase again after the government’s energy price cap is reset in October. Ten percent would be the highest rate since 1982.The rapidly changing landscape was reflected in the prospects for economic growth. In 2023, the bank now predicts, the economy will shrink 0.25 percent instead of growing 1.25 percent, which it predicted three months ago.On Wednesday, policymakers at the U.S. Federal Reserve increased interest rates half a percentage point, the biggest jump in 22 years, in an effort to cool down the economy quickly as inflation runs at its fastest pace in four decades. The U.S. central bank also said it would begin shrinking its balance sheet, allowing bond holdings to mature without reinvestment.On Thursday, the Bank of England said its staff would begin planning to sell the government bonds it had purchased, but a decision on whether to commence these sales hasn’t been made. The bank stopped making new net purchases at the end of last year after buying 875 billion pounds ($1.1 trillion) in bonds. The bank said it would provide an update in August.The outlook for the global economy has been rocked by the war in Ukraine, which is pushing up the price of energy, food and other commodities such as metals and fertilizer. The Covid-19 pandemic continues to disrupt trade and supply chains, particularly from shutdowns stemming from China’s zero-Covid policy. Last month, the International Monetary Fund slashed its forecast for global economic growth this year to 3.6 percent from 4.4 percent, which was predicted in January.The challenge for policymakers in Britain is stark. The Bank of England has a mandate to achieve a 2 percent inflation rate. At the same time, there is evidence that the economy is already slowing down, consumer confidence is dropping and businesses are worried that price increases will depress consumer spending, a key driver of economic growth. With inflation at its highest level in three decades and wage growth unable to keep up, British households are facing a painful squeeze on their budgets.Household disposable income, adjusted for inflation, is expected to fall 1.75 percent this year, the second largest drop since records began in 1964, the bank said. The central bank’s challenge is to slow inflation to ease the pressure on households and businesses without cooling the economy too much and tipping it into a recession.“Monetary policy must, therefore, navigate a narrow path between the increased risks from elevated inflation and a tight labor market on one hand, and the further hit to activity from the reduction in real incomes on the other,” Mr. Bailey said on Thursday.Weighing that alternative, policymakers figured that pressures on costs for business and prices for consumers would persist unless they took action. Companies expect to strongly increase the selling prices for their goods and services in the near term, after the sharp rises in their expenses, the bank said. At the same time, inflation could become more entrenched because the unemployment rate is low, forcing companies to raise wages to meet their hiring needs. More

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    Britain’s inflation rate climbed to 7 percent, the highest in 30 years.

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    In Britain, several pieces of dispiriting economic news arrived this week: Prices are rising at their fastest pace in 30 years, wages adjusted for inflation fell the most in nearly eight years and the economy hardly grew in February.It is mounting evidence of what is turning out to be a challenging year for many, with the tightest squeeze on household budgets forecast since records began in 1956.Even before Russia invaded Ukraine, Britain’s economic growth had slowed. But that war has weakened Britain’s economic outlook, as is the case in many countries. Rising energy costs are passing through to household bills. Manufacturers, farmers and supermarkets have warned about the rising cost of essential inputs into their supply chain from goods produced in Russia and Ukraine — including metals, wheat, fertilizer and sunflower oil. The pain is wide-reaching: Even fish and chips, a traditionally cheap British staple, has jumped in price.The Consumer Prices Index rose 7 percent in March from a year earlier, up from 6.2 percent the previous month, the Office for National Statistics said Wednesday. That exceeded economists’ predictions. Inflation was driven by record prices for gasoline and diesel, as well as by large increases at restaurants and hotels, for food and drinks, and clothing and furniture.This broad-based increase in prices for products that are usually seen as less volatile “will be viewed with particular discomfort by the Bank of England,” Sandra Horsfield, an economist at Investec, wrote in a note. The central bank has raised interest rates three times since December to their prepandemic level in an effort to arrest price increases, even as policymakers have cut the outlook for economic growth.The statistics agency also said on Wednesday that wholesale prices were rising at their fastest pace since September 2008. Output prices of manufacturers rose nearly 12 percent in March from a year earlier, while their input prices rose 19 percent, a record high.On Tuesday, data showed Britain’s unemployment rate fell to 3.8 percent, back to its prepandemic low, while there are a record number of job vacancies. Signs of a tight labor market are fueling expectations that workers will be in a position to demand larger salaries. Wages, excluding bonuses, in December to February rose 4 percent from a year earlier, but at the moment the gains are being eaten away by inflation. Once adjusted for price increases, pay fell 1 percent, the most since mid-2014.The British economy has recovered from its pandemic slump, but growth is waning. After the Omicron wave subsided in February, bookings for accommodation and travel services increased, offering the main contributor to economic growth that month. The economy grew just 0.1 percent, as manufacturing of cars, electrical products and chemicals all declined, the statistics agency said on Monday. More

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    From Liverpool to London, Inflation Means Tighter Wallets and Colder Homes

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    LIVERPOOL, England — For the past few weeks Vincent Snowball hasn’t needed to use the weekly food bank that runs out of a church near Liverpool’s city center. But he’s still there each Tuesday, laying out fabric swatches to advertise his upholstering services, and to socialize with the people he grew up with.Like many people across Britain, Mr. Snowball, 61, has been forced to cut down his already modest expenses to stabilize his finances. Prices are rising at their fastest pace in three decades.“I go to Tesco and I get a shock,” he said, referring to Britain’s ubiquitous supermarket chain. The prices there are “troubling,” he said. Instead he shops at Aldi, the rapidly growing chain that claims to be the cheapest supermarket in Britain.Prices are rising steeply in the United States and across Europe, driven by rising energy costs and supply-chain issues triggered by the easing of pandemic rules. But in Britain, there is a fear that sharply escalating heat and electricity bills, combined with food inflation, will push millions more into poverty.The Bank of England on Thursday lifted interest rates for the second time in two months — moving before the Federal Reserve or the European Central Bank. But policymakers acknowledge there is little they can do about the global factors driving inflation.Up and down the country, people are turning their heat down or off, switching to cheaper supermarkets, taking fewer car trips, cutting out takeout and restaurant meals, and abandoning plans for vacations.Because natural gas prices have risen so much, Vincent Snowball rarely turns on his heat, using it mainly for hot water. “I’m very conscious about what I use,” he said.Mary Turner for The New York TimesThursday brought more painful news when the government’s price cap on energy bills was raised by 54 percent, or about 700 pounds ($953) annually, reflecting high global prices for natural gas. The increase will affect 22 million households beginning in April. That same month, a large rise in National Insurance, a payroll tax that finances the National Health Service, among other things, will also take effect, further shrinking take-home pay.Although inflation is expected to peak in April, at 7.25 percent, Bank of England economists say household finances will continue to erode: For the next two years, household incomes after inflation and taxes will be less than the year before, the bank said. This will be the third stretch of time in about a decade that real wages have shrunk in Britain.This period is “somewhat unprecedented because it comes on the back of a very huge Covid shock” and Brexit, said Arnab Bhattacharjee, a professor of economics at Heriot-Watt University in Edinburgh and a researcher at Britain’s National Institute of Economic and Social Research.Mr. Snowball’s gas bill has risen, after a surge in natural gas prices in Europe late last year, and so he mostly uses it for hot water. Despite living in the northwest of England, he rarely turns the heating on. “I’m very conscious about what I use,” he said.But there are limits to how much Mr. Snowball can withstand. He receives about £300 ($403) in state support toward his £550 monthly rent and another £213 a month in working tax credits, financial support for people on low incomes. There aren’t any luxuries to cut.Having cup of tea and a chat at the food pantry run by Micah Liverpool, a charity. Since the pandemic began, the number of Britons receiving the main public income benefit has doubled.Mary Turner for The New York Times“There’s millions of people like that,” Mr. Snowball said.Although the British economy has slowly shaken off much of the torpor from the sharp recession brought on by the coronavirus, millions aren’t enjoying the recovery. Since the start of the pandemic, the number of people receiving Universal Credit, the main government income benefit, doubled to six million. Since the peak nearly 11 months ago, it has fallen only to 5.8 million. The number of people using food banks also jumped, according to the Trussell Trust, a nonprofit that provides emergency food packages, and independent groups.A cost-of-living crunch was forewarned last fall but “what came as a surprise this time round was the degree of food price inflation,” Mr. Bhattacharjee said. “This has not happened in the past decade.” In December alone, food and nonalcoholic drink prices rose 1.3 percent, the fastest monthly pace since 2011.For more and more people, it’s impossible to ignore. Katie Jones’s main food shopping trip, which she does twice a month, used to cost up to £80; now it’s more likely to be £100. Ms. Jones, 33, works full time in Liverpool city center at a branch of a national coffee shop chain. She lives across the River Mersey with her partner and their three children where, in December, the energy bills increased from £95 a month to £140.“We no longer have takeaways in the house,” she said. “Partly it was for health reasons, but I also noticed just how much it costs.” And there are fewer date nights with her partner because she can’t push the cost of them out of her head.In Earlsfield, the local food bank has had to cut more expensive food and toiletry items from its packages.Mary Turner for The New York TimesFood inflation is hurting those who are trying to help. Managers of the Earlsfield Foodbank in southwest London recently decided to cut items from their offering — including juice, snacks, cheese and peanut butter — because they are too expensive now. And they will provide fewer toiletries and household items, such as laundry detergent.Each week, the food bank buys a wide variety of fresh vegetables and fruit, and other food, to supplement its donations. In the past few weeks, the cost of supplies has increased worryingly.“That number is going up and isn’t really sustainable throughout the year,” said Charlotte White, the manager.As the cost of purchases rises, so does the list of people seeking help. Last week, eight more people registered with Earlsfield Foodbank, and 71 people received food parcels. In March 2020, they were averaging 25 guests a week, with fewer families and working people.“Families are already at, if not beyond, breaking point,” said Ruth Patrick of the University of York and the lead academic of Covid Realities, a national project in which about 150 low-income parents and care-providers have documented their experiences through the pandemic. “We get a really dominant message coming through about fear and anxiety and worry about how people will get by.”“Probably, I was quite comfortable last year,” said Joanne Barker-Marsh. “Now there is no buffer.” She is considering selling her home, which is becoming less affordable.Mary Turner for The New York TimesThrough the project, Joanne Barker-Marsh, 49, has found some emotional, and at times financial, support. She lives in a two-bedroom house on the outskirts of Manchester with her 12-year-old son Harry, and worries that, with its high ceilings and uncarpeted floors, it is too cold. Understand Rising Gas Prices in the U.S.Card 1 of 5A steady rise. More

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    Britain Braces for Higher Rates as Bank of England Meets

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    In an effort to combat rapid price rises in Britain, the Bank of England raised interest rates on Thursday, its first back-to-back increases in more than 17 years, and said it would start to shrink its enormous holdings of government and corporate bonds.Inflation is already at its fastest pace in three decades: The annual rate rose to 5.4 percent in December. But by April the central bank expects it to climb to about 7.25 percent, the highest projection the bank has ever made. In response, the policymakers voted to raise interest rates by 25 basis points to 0.5 percent.But four of the nine policymakers wanted to do something bolder: a 50-basis point increase, a move twice as big. The bank has never approved a rate increase that large before.The Bank of England raised interest rates in December for the first time in three and half years, looking past the economic uncertainty created by Omicron and focusing on the battle against inflation.In the end, the bank only expects Omicron to have weighed on Britain’s economy in December and January, whereas inflation is proving a much more persistent problem. Inflation far exceeds the central bank’s 2 percent target and even after it’s expected to peak in April will stay above 5 percent for the rest of the year.Half of the increase in inflation between now and April will be because of higher energy prices, the Bank of England said. Earlier on Thursday, Ofgem, Britain’s energy regulator, announced that the price cap on energy bills would rise by 54 percent in April for 22 million households. The government has said it will try to mitigate the pain by giving millions of households £350, or $476, off bills this year in the form of grants and loans.The rest of the projected inflation increase over the next three months is expected to be split between higher prices for goods and services.One of the major concerns for policymakers is that businesses and consumers will begin to assume that rapid cost increases will continue, causing workers to demand higher wages in response and businesses to continue to raise their prices, fueling a cycle that keeps inflation rates higher for longer.In January, Catherine Mann, a member of the bank’s rate-setting committee, said it was the job of monetary policy to “lean against” expectations that could lead to this scenario.But there are already signs it is happening. The central bank’s economists expect wage settlements to rise by nearly 5 percent over the next year, based on surveys with businesses it consults.Still, prices are rising faster than wages. For months, the higher inflation rates have prompted concerns about a cost-of-living crisis in Britain, as the budgets of households, particularly low-income ones, are squeezed by the most rapid food price inflation in a decade, higher energy bills and other rising costs.The squeeze is set to be even worse than the central bank projected just three months ago. For 2022, the bank’s measure of net income after taxes and inflation is expected to fall by 2 percent from last year, and fall again in 2023. In November, the central bank had projected a 1.25 percent decline in 2022.Since 1990, that measure of income has only fallen twice before on an annual basis, in 2008 and 2011.But eventually the squeeze is destined to hamper the overall economy. Growth in gross domestic product is “expected to slow to subdued rates,” according to the minutes of rate-setting meeting which concluded on Wednesday. “The main reason for that is the adverse impact of higher global energy and tradable goods prices” on incomes and spending. The central bank also expects it to push the unemployment rate back up to 5 percent, after falling to 3.8 percent in the first quarter.That economic slowdown is expected to push inflation back below the central bank’s target by 2024.On Thursday, policymakers also voted to begin reducing the bank’s bond holdings. The bank will stop reinvesting the proceeds from bonds that mature in their holdings, which are made up of £875 billion in government bonds and £20 billion in corporate bonds. Over the course of this year and next year, £70 billion in government bonds will mature and shrink the size of the bank’s balance sheet. The bank will also sell its corporate bond holdings over the next two years. More

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    Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say

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    Within 24 hours, the Federal Reserve, Bank of England and European Central Bank all stepped forward to deal with price increases.There is still a lot scientists do not know about Omicron. There is cautious optimism — but no certainty — about the effectiveness of vaccines against this fast-spreading variant of the coronavirus, and experts do not fully understand what it means for public health or the economy.But central banks have concluded they don’t have the luxury of waiting to find out.Facing surging inflation, three of the world’s most influential central banks — the Federal Reserve, Bank of England and European Central Bank — took decisive steps within 24 hours of each other to look past Omicron’s economic uncertainty. On Thursday, Britain’s central bank unexpectedly raised interest rates for the first time in more than three years as a way to curb inflation that has reached a 10-year high. The eurozone’s central bank confirmed it would stop purchases under a bond-buying program in March. The day before, the Fed projected three interest rate increases next year and said it would accelerate the wind down its own bond-buying program.The perception that the Bank of England would “view the outbreak of the Omicron variant with greater concern than it actually did” caused the surprise in financial markets, ” Philip Shaw, an economist at Investec in London, wrote in a note to clients. The Fed also “carried on regardless” with its tightening plans, he added.Aside from Omicron, the central banks were running out of reasons to continue emergency levels of monetary stimulus designed to keep money flowing through financial markets and to keep lending to businesses and households robust throughout the pandemic. The drastic measures of the past two years had done the job — and then some: Inflation is at a nearly 40-year high in the United States; in the eurozone it is the highest since records began in 1997; and price rises in Britain have consistently exceeded expectations.It is still unknown how Omicron will affect the economic recovery. Vaccine makers are still testing their shots against the variant.Alessandro Grassani for The New York TimesThe heads of all three central banks have separately decided that the price gains won’t be as temporary as they once thought, as supply chains take a while to untangle and energy prices pick up again.Andrew Bailey, the governor of the Bank of England, said that policymakers in Britain were seeing things that could threaten inflation in the medium-term. “So that’s why we have to act,” he said on Thursday.“We don’t know, of course, a lot about Omicron at the moment,” he added. It could slow the economy, and already there are canceled holiday parties, fewer restaurant bookings, less retail foot traffic and signs that more people are staying home. But Omicron could also worsen inflationary pressures, he said. “And that’s, I’m afraid, a very important factor for us.”Already, price gains have popped higher this year as snarled supply chains and goods shortages have raised shipping and manufacturing costs. Depending on the severity of Omicron and how governments react, the variant could cause factories to shut down and could keep supply chains in disarray and workers at home, prolonging goods and labor shortages and pushing inflation higher.At the same time, policymakers are assuming the impact on the economy will be milder than previous waves of the virus. With each surge in cases and reintroduction of restrictions, the dent to the economy has gotten smaller and smaller. This would lessen the risk that the central banks end up tightening monetary policy into a downturn.Still, it is an awkward balancing act. On the same day the Bank of England raised rates, its staff cut half a percentage point from their growth forecasts for the final three months of the year. By the end of 2021, the British economy will still be 1.5 percent smaller than its prepandemic size, the bank estimated.Christine Lagarde, the president of the European Central Bank, said Omicron had created uncertainty in the face of a strong recovery.Pool photo by Ronald Wittek“From a macroeconomic perspective, it’s unlikely that the fourth wave is going to have as meaningful an impact as we’ve seen even during last winter,” said Dean Turner, an economist at UBS Global Wealth Management.The economic recoveries from the pandemic, though bumpy, haven’t been derailed yet. Unemployment rates are falling in Europe and the United States, and businesses are complaining that is difficult to hire staff. That, combined with the burst of inflation, was enough to bolster the case for some monetary tightening.“There’s a lot of uncertainty with the new variant, and it’s not clear how big the effects would be on either inflation or growth or hiring,” Jerome H. Powell, the Fed chair, said on Wednesday. But there is a “real risk” inflation could be more persistent, he also said, which was part of the reason the bank sped up its plans to taper its bond purchases.Ending the Fed’s bond purchases sooner would give the central bank room to react to a wider range of economic outcomes next year, Mr. Powell said.“The data is pretty glaring,” Mr. Turner of UBS said of recent statistics on inflation and employment. “There’s only so much caution you can get away with,” before central banks need to take action, he said.Omicron has created uncertainty in the face of a strong recovery, Christine Lagarde, the president of the European Central Bank said on Thursday after she outlined how the bank would end its largest pandemic-era stimulus measure.Vaccine-makers are still testing their shots against Omicron and medical officials are encouraging restraint when it comes to socializing rather than implementing new lockdowns, but central bankers are marching ahead because time isn’t on their side. The effect of monetary policy decisions on the wider economy isn’t immediate.The Bank of England is forecasting that inflation will peak at 6 percent in April, three times the central bank’s target. Within such a short time frame, there is little policymakers can do to stop that from happening, but they can try to signal to businesses and unions setting wages that they will act to stop higher inflation from becoming entrenched, said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. This may prevent higher prices from spilling over into significantly higher wages, which could cause businesses to raise prices even more.While all three central banks are facing similar problems with high inflation and are keeping watch over wage negotiations, their future challenges are different.The Federal Reserve and Bank of England are worried about the persistence of high inflation. For the European Central Bank, inflation in the medium term is too low, not too high. It is still forecasting inflation to be below its 2 percent target in 2023 and 2024. To help reach that target in coming years, the central bank will increase the size of an older bond-buying program beginning in April, after purchases end in the larger, pandemic-era program. This is to avoid “a brutal transition,” Ms. Lagarde said.She warned against drawing strong comparisons between Britain, the United States and the eurozone economies.“Those three economies are at a completely different states of the cycle,” she said. “We are in a different universe and environment,” even though there might be some spillover effects across countries from the actions each central bank takes.Melissa Eddy More

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    Cambo, an Oil Project off Scotland, Is Halted by Owner

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    An oil project off the coast of Scotland that had become a test of Britain’s environmental credentials was shelved by its main owner on Friday.The decision to halt Cambo, as the oil field is known, is a huge win for environmental groups like Greenpeace, and a blow to the North Sea oil industry. It comes just over a week after Shell, which owns 30 percent of the project, pulled out of the investment.“We are pausing the development while we evaluate next steps,” said Siccar Point Energy, a London-based company that is backed by private equity firms, including Blackstone, the financial management giant.Siccar Point said it had planned to invest $2.6 billion in Cambo, and had already spent $190 million on the field since acquiring it in 2017. The firm said that developing Cambo, a potentially valuable source of oil and natural gas, would have created 1,000 jobs.Environmental groups, on the other hand, said that starting new drilling projects was not compatible with Britain’s goals on tackling climate change and reaching net zero greenhouse gas emissions by 2050. The British government has been considering whether to let Cambo go ahead.Located northwest of Scotland’s Shetland Islands, Cambo became a target of protests, including at the recent United Nations climate summit in Glasgow. Scotland’s top politician, First Minister Nicola Sturgeon, has said she did not think it should be given a green light.On Dec. 2, Shell said it would not go ahead with investment because the economic case was not strong enough.Shell’s decision, which was also prompted by the potential for delays from protests and lawsuits, led Siccar Point to decide it could not “progress on the originally planned time scale,” the firm said. More