Russia’s central bank cuts interest rates to 17%
Just in: Russia’s central bank is cutting interest rates from 20% to 17%.
The move reverses some of the doubling of interest rates last month, when the Ukraine war triggered the first wave of sanctions on Russia and sent the rouble plunging.
Explaining the move, the Bank of Russsia said inflation pressures have eased as the rouble has partially recovered, and financial stability risks have stabilised, but are still present.
It also warns that Russia’s economic activity is still being “considerably” constrained by external conditions.
Today’s decision reflects a change in the balance of risks of accelerated consumer price growth, decline in economic activity and financial stability risks.
Data this week showed that Russia’s service sector contracted rapidly last month, with economists predicting a steep recession this year.
The Bank of Russia adds that it could cut interest rates again at future meetings:
In its further key rate decisions, the Bank of Russia will take into account risks posed by external and domestic conditions and the reaction of financial markets, as well as actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon, and holds open the prospect of further key rate reduction at its upcoming meetings.
On food, Ukrainian prime minister Denys Shmyhal has predicted that this year’s grain harvest is likely to be 20% less than last year because of a reduced sowing area following Russia’s invasion.
He said there was a shortage of fuel for farmers but Ukraine knew how to keep them supplied. He also said Ukraine had large stocks of grain, cereals and vegetable oil, and could feed its population (via Reuters).
Here’s a chart showing the jump in food prices:
Global food prices surge to record highs
World food prices jumped to new record high in March as the war in Ukraine rattled drove up prices, adding to the inflation pressures on people around the globe.
The U.N. food agency reports that food prices rose nearly 13% during last month, according to its index tracking food commodities.
Vegetable oils, cereals and meat all hit record highs, while sugar and dairy products prices also rose significantly.
The Food and Agriculture Organization says its food price index, which tracks the most globally traded food commodities, made “a giant leap” in March, to 159.3 points from 141.4 for February.
Cereal prices soared by 19.7% to a record in March, driven by the Ukraine war, the FAO explains:
This month’s increase reflected a surge in world prices of wheat and coarse grains, largely driven by conflict-related export disruptions from Ukraine and, to a lesser extent, the Russian Federation. The expected loss of exports from the Black Sea region exacerbated the already tight global availability of wheat.
With concerns over crop conditions in the United States of America (USA) also adding support, world wheat prices rose sharply in March, soaring by 19.7 percent.
Vegetable oil also hit record highs, up 23% in the month, as supplies from major exporters Russia and Ukraine fell.
The sharp rise of the index was driven by higher sunflower, palm, soy and rapeseed oil prices. International sunflowerseed oil quotations increased substantially in March, fuelled by reduced export supplies amid the ongoing conflict in the Black Sea region.
In the meantime, palm, soy and rapeseed oil prices also rose markedly, buoyed by rising global import demand in the wake of sunflower oil supply disruptions.
The Ukraine conflict also contributed to record meat prices last month, which rose another 4.8%, the FAO adds.
In March, pig meat prices registered the steepest monthly increase on record since 1995, underpinned by supply shortfalls of slaughter pigs in Western Europe and a surge in internal demand in light of the upcoming Easter holidays.
International poultry meat prices firmed, fuelled by reduced supplies from leading exporting countries following avian flu outbreaks, further impacted by Ukraine’s inability to export poultry meat amid the ongoing conflict.
There’s further misery for some air passengers today, with travel journalist Simon Calder reporting British Airways has cancelled another 68 flights, while easyJet has cancelled 42.
There’s a handy list here.
Next weekend will also be very busy on the UK roads, as millions of people embark on an Easter getaway.
The AA estimates that more than 27.6 million car journeys are planned between Good Friday and Easter Monday (between 15th and 18th April).
Some 13.6 million are expected on Good Friday alone, leading to fears of tailbacks on popular tourist routes.
AA spokesman Tony Rich said:
“The Easter holidays look set to give British tourism a much-needed boost as people cut back on overseas travel.
“With more than 27.6 million trips planned over the bank holiday weekend, we can expect significant congestion across the UK as people flock to coastal resorts and holiday homes.”
Manchester Airport: We don’t have enough staff
The boss of Manchester Airport’s owner has admitted the airport does not have enough staff, and warned that the long queues at the airport could persist for months.
Charlie Cornish, chief executive of Manchester Airports Group, has written an open letter to passengers, in which he apologises for the disruption, and explains that the the airport hasn’t been able to hire staff fast enough.
“The simple fact is that we don’t currently have the number of staff we need to provide the level of service that our passengers deserve.
“Despite our efforts since last autumn, the tight labour market around the airport has meant we have just not been able to hire people quickly enough to establish a full-strength team.
“Practically, staff shortages mean that we cannot open all the security lanes we need and, at times, this results in longer queues than we want to see.
“While we still expect most passengers to get through in less than 30-40 minutes, there will be times over the next few months when waiting times will rise to between 60 and 90 minutes.”
Cornish explains that the airport has interviewed 4,000 staff in the last two months, and expects around 250 new security staff to start in the operation by early May. Staff with the right level of security clearance are also being deployed to help.
Cornish advises passengers to arrive at the airport three hours before their flight leaves, to allow enough time to check-in, get through security and reach the departure gate.
He says the airport doesn’t want to cap capacity and force airlines to cancel flights, as this would cause “enormous disruption to holidays, business trips and long-awaited visits to see friends and family.”
The managing director of Manchester airport quit earlier this week after rising criticism over chaos that saw thousands of passengers missed their flights because of queues up to seven hours long.
Deputy CEO Ken O’Toole has the BBC the chaotic scenes last weekend were an “isolated incident”.
But O’Toole insists people would prefer to queue than see their flight cancelled.
We want to protect the full flying schedule. We want to make sure that after two years of people not getting away, those trips that they have booked, they can take them,” he said.
“That unfortunately does mean on occasion there will be queues which are not acceptable, they’re not what we’re aiming for.
“But the compromise between having that situation or cancelling lots of flights for people – which other airports have done in recent weeks – we believe people would prefer to accept a queue and make sure they get away.”
Those queues have been exceptionally long, though, with some passengers enduring waits of up to eight hours in terminal buildings before they could check in.
Airlines and cross-Channel services brace for busiest weekend since Covid
With a very busy weekend looming, passengers have been told to allow extra time to negotiate airport queues, as high rates of Covid infections worsen staff shortages at check-in and security, our transport correspondent Gwyn Topham writes.
Meanwhile, tailbacks on the major roads to the Channel are expected to intensify, as Eurotunnel anticipates rising traffic in both directions and P&O Ferries services remain suspended.
Passengers booked with P&O on the Dover-Calais route have been told they cannot travel this weekend, as the rival operator DFDS, which had been accommodating P&O customers, is now fully booked.
Airports are redeploying office staff with security clearance to frontline roles where possible to help mitigate the chaotic scenes of recent days, particularly at Manchester airport.
EasyJet, which has had to axe hundreds of flights this week, said it would be pre-emptively cancelling a further 50 flights a day over the weekend to minimise disruption.
Large numbers of crew remain sick with Covid, affecting services at Gatwick, Luton and Manchester. However, the airline said it would still be operating more flights than at any point since 2019 – about 1,600 a day, 300 more than in August 2021.
Introduction: Air industry warned over distressing disruption
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
UK airlines and airports have been warned about the levels of disruption being by passengers, as people head abroad in the run-up to Easter, some of them for the first time since the pandemic began.
After days of long queues, cancellations and chaotic scenes at airports, the aviation regulator has warned travel firms to stop cancelling flights at the last minute and promptly pay compensation to disrupted passengers.
Civil Aviation Authority chief executive Richard Moriarty has written to airlines and airports, saying:
“Instances of late notice cancellations and excessive delays at airports are not just distressing for affected consumers but have the potential to impact confidence levels across the industry, at just the point when passengers are returning to flying.”
The CAA’sa warning comes as airlines and cross-Channel services brace for their busiest weekend since the start of the pandemic, with outbound and returning holidaymakers set to swell numbers at ports that are already struggling to cope with surging demand.
Airports and airlines have blamed recruitment problems, and illness from Covid-19, for leaving them short-staffed. Having cut staff once the pandemic began, the industry is trying to meet renewed demand for travel after the UK lifted the last testing restrictions on 18 March.
Moriarty, though, says recruitment should have been faster, and insists the travel sector sets “deliverable” schedules:
We know that you are working hard to recruit these new colleagues, but it is clear that this has not always happened sufficiently quickly to cope with the increased passenger travel in recent days.
Given the consequences for passengers of cancelled and disrupted journeys I encourage you to do all you can to ensure that you have the necessary level of appropriately-trained and cleared staff resources in place.”
It is “very important” that airlines are setting schedules “on a basis that is deliverable given available staff (including contractors), and has resilience for staff sickness, including from Covid,” Mr Moriarty added.
Hundreds of flights have been cancelled in recent days, with British Airways cancelling another 74 flights on Thursday and easyJet 52.
There’s also disruption in Kent, where an eastward section of the M20 was shut this week for thousands of lorries to park, due to delays at the port of Dover.
Also coming up today.
In the energy markets, the Brent crude oil price is hovering around $100 per barrel after members of the International Energy Agency agreed to release another 60 million barrels of oil from their emergency stocks yesterday, amid a shortage exacerbated by the Russian invasion of Ukraine.
Boris Johnson is set to meet the German Chancellor as they look to discuss how to help European countries wean themselves off Russian gas following the attack on Ukraine.
- 12.15pm BST: ECB board member Fabio Panetta speaks at the ‘Technology and Finance’ conference organised by IESE Business School
- 1.30pm BST: Canadian jobs report for March