the times | Wednesday April 13 2022 37
Business
Prices continued to rise at their fastest
pace in a generation in the United
States last month after the cost of petrol
surged in the wake of Russia’s invasion
of Ukraine.
America’s consumer price index rose
8.5 per cent in March, compared with a
year ago, an annual rate not recorded
since December 1981. Rent and food
costs also drove it higher.
The Federal Reserve is moving
more aggressively to combat inflation.
It raised interest rates last month and is
preparing to start shedding assets from
its balance sheet.
The headline index increased 1.2 per
cent on a monthly basis, slightly ahead
of economists’ expectations and up
from the 0.8 per cent rise in February.
More than half of this rise was gener-
ated by the sharp rally in fuel costs.
Petrol prices rose to record highs across
the US last month as oil soared in the
early weeks of the war in Ukraine.
commoditiescommodities currenciescurrencies
$
1.400
1.350
1.300
1.250$£/$
$1.3031 (-0.0004)
140
120
100
80Dow Jones
34,220.36 (-87.72)
38,000
36,000
34,000
32,0001.225
1.200
1.175
1.150£/€
€1.2006 (+0.0022) ¤world markets (Change on the day)
Gold
$1,974.35 (+26.70) $
2,200
2,000
1,800
1,600Brent crude (6pm)
$104.42 (+6.29)FTSE 100
7,576.66 (-41.65)Mar 14 22 30 Apr 7 Mar 14 22 30 Apr 7 Mar 14 22 30 Apr 7 Mar 14 22 30 Apr 7 Mar 14 22 30 Apr 7 Mar 14 22 30 Apr 78,000
7,500
7,000
6,500ing confirmation in the Senate to serve
as the central bank’s vice-chairwoman,
welcomed the drop in core price
growth. “I’ll be looking to see whether
we continue to see moderation in the
months ahead,” she told a Wall Street
Journal event.
As the central bank tries to dampen
price growth, its policymakers are due
to meet at the start of next month.
Markets are pricing in a 87 per cent
chance that US interest rates will rise by
50 basis points — rather than the typi-
cal 25 — for the first time since 2000,
according to the CME FedWatch Tool.
“Core price pressures finally appear
to be moderating,” Andrew Hunter,
senior US economist at Capital Eco-
nomics, said. “The recent tentative eas-
ing of goods supply shortages appears
to have been the key driver, with used
vehicle prices down by 3.8 per cent and
new auto prices only edging higher.
“The former was an even sharper fall
than we had expected, but the latest
auction data suggests it has further to
Continued on page 38, col 5Stagflation fears grow among fund managers
Global fund managers
are increasingly fearful
of stagflation, according
to the closely watched
Bank of America survey
(Arthi Nachiappan
writes).
Sixty-six per cent of
global fund managers
surveyed expected to
see stagflation —
below-trend growth and
above-trend inflation —
in the next 12 months,
the highest percentage
since the financial crisis
in 2008.
Fund managers
across the board
increased their
expectations for
inflation and reduced
their expectations forgrowth after the
outbreak of the war in
Ukraine, which is
expected to push up
energy costs and
exacerbate supply chain
disruptions.
A net 71 per cent of
respondents were
pessimistic about
prospects for global
growth in the coming
months, which is the
highest level since the
survey began in the
early 1990s.
The prospect of a
global recession was
seen as the main risk for
global markets. The
Russia-Ukraine conflict
has receded to fourth
place after concernsabout aggressive
central bank interest
rate actions and
inflation. Respondents
expect the US Federal
Reserve to raise interest
rates by up to seven
times in the current
cycle but most expect
inflation to soften over
the next 12 months.
In terms of regional
stock market allocations,
investors were most
bullish on US equities,
while European and UK
equities were the top
bearish bets. The survey
was conducted from
April 1-7, involving 292
participants with
£640 billion of assets
under management.US regulators have banned Imperial
Brands’ myblu vaping devices after a
review found there was a lack of evi-
dence that they would protect public
health, in a blow for the tobacco
industry’s transition from cigarettes.
The Food and Drug Administration
has issued marketing denial orders for
several myblu electronic nicotine
delivery products. After considering
their design and manufacturing it
concluded the applications “did not
demonstrate that the potential benefit
to smokers who switch completely or
significantly reduce their cigarette use
would outweigh the risk to youth”.
The regulator said the order moved it
“one step closer toward ensuring all
deemed new tobacco products have
undergone science-based review and
received marketing authorisation by
the FDA before they can be legally
marketed”. Officials have been review-
ing products across the industry follow-
ing concerns over the potential for
products to lure young non-smokers.
The order comes just weeks after
Stefan Bomhard, Imperial’s chief exec-
utive, and its US management team
hosted an investor event presenting
their strategy for a refreshed consumer
marketing plan for myblu.
Imperial launched a marketing trial
last autumn for the brand in North
Carolina. It said in a trading update last
Their latest flame Universal Music is adding Elvis Presley’s catalogue to its library under a publishing deal with Authentic
Brands Group for an undisclosed sum. Presley had 114 songs in the American Billboard top 40, more than any other artistImperial vapes banned
by American watchdog
week that it was “progressing well”,
with a further update due at its half-
year results next month.
Since becoming chief executive in
July 2020, Bomhard, 54, has refocused
Imperial’s investment in its struggling
next-generation products (NGP) busi-
ness, including vaping in the US.
The blu brand was acquired by
Imperial in 2015 as part of its $7.1 billion
acquisition of a stable of brands that
were being sold as part of Reynolds
American’s takeover of Lorillard.
The FDA order is the latest setback
for Imperial’s next-generation prod-
ucts business, which after investment
and expansion under Alison Cooper, its
former chief executive, has suffered a
series of accounting hits, including
£124 million writedowns in inventory
and intellectual property in 2020.
Myblu is a pod-based product, part of
Imperial’s blu brand range and under-
stood to account for most of Imperial’s
US next-generation products revenue.
Imperial is the third-largest tobacco
company in the US, which is the world’s
largest vaping market. Imperial’s
business there has its headquarters in
Greensboro, North Carolina.
A spokesman said Imperial was dis-
appointed, disagreed with the regula-
tor’s scientific evaluation and believed
its products met the regulatory require-
ments. It plans to appeal.
Shares in Imperial Brands were
down 12p, or 0.7 per cent, at £16.78.Alex Ralph
MICHAEL OCHS/GETTY IMAGESCallum Jones
US Business Correspondent
Stripping out volatile food and energy
costs, the “core” consumer price index
gained 0.3 per cent on the month, down
from 0.5 per cent in February. This
decline led to hopes that inflation is set
to subside over the coming months.
Housing costs, air fares, medical care
and car insurance also boosted infla-
tion, according to data released by the
US Department of Labor. However,
used car and truck prices, which have
accelerated rapidly over the past year,
fell 3.8 per cent on the month.
After a positive start, the S&P 500
closed 0.3 per cent lower at 4,397.45 in
New York last night. The technology-
focused Nasdaq Composite dropped
0.3 per cent to 13,371.57.
The consequences of the Fed’s efforts
to contain inflation have been worrying
equity and bond markets. The bench-
mark ten-year treasury yield, which
touched a three-year high on Monday
as investors awaited the latest inflation
reading, slipped 6.6 basis points to
2.716 per cent after its release.
Lael Brainard, a Fed governor await-US inflation hits 40-year high
6 Soaring petrol prices drive index up to 8.5% 6 Markets expect 50-point rise in interest rates