Global retailers have significantly trimmed down their profit projections, sighting raw material inflation and removal/reduction of stimulus, dampening the outlook.
The Russia-Ukraine war has led to hikes in prices of food, and fuel oil, as well as to fears of a recession in some parts of the world, including Europe, the US and the UK.
Over the year, the CPI’s food index increased 9.4 per cent, the largest 12-month increase since April 1981.
EU inflation, already at its highest in more than two decades, is expected to average close to 10 per cent in the event of a Russian gas ban, according to the European Commission (EC).
The EC now expects real GDP growth for 2022 in both the EU and the euro area to be 2.7 per cent in the 19-nation euro area and the broader 27-country EU – down from a forecast of 4 per cent three months ago.
Harmonised Index of Consumer Prices (HICP) inflation is now expected to average an all-time high of 6.8 per cent in 2022, before declining to 3.2 per cent in 2023.
In the euro area, inflation is projected at 6.1 per cent in 2022 and 2.7 per cent in 2023. This compares with 3.5 per cent and 1.7 per cent, respectively, in the winter 2022 interim forecast (WiF).
The UK Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8 per cent in the 12 months to April 2022, up from 6.2 per cent in March. This is the highest recorded 12-month inflation rate in the National Statistics series.
Annual inflation rate in the US unexpectedly accelerated to 8.6% in May of 2022, the highest since December of 1981 and compared to market forecasts of 8.3%.
Energy prices rose 34.6%, the most since September of 2005, due to gasoline (48.7%), fuel oil (106.7%, the largest increase on record), electricity (12%, the largest 12-month increase since August 2006), and natural gas (30.2%, the most since July 2008).
Food costs surged 10.1%, the first increase of 10% or more since March 1981.