The euro zone’s inflation rate has risen to a record high in November, preliminary data showed Tuesday, prompting further questions about what the European Central Bank will do next with its monetary policy.

Headline inflation came in at 4.9% for the month, compared to the same month last year. This was above a consensus forecast of 4.5% from Reuters and was higher than October’s 4.1%. The figure was the highest on record in the 25 years that the data has been compiled.

According to Europe’s statistic office, Eurostat, energy is on track for its highest annual price rise in November at 27.4%, from 23.7% in October.

The data comes at a time when policymakers are waiting for more data on a new Covid-19 variant, omicron, which was reported for the first time last week in southern Africa.

The travel restrictions implemented in the wake of the new variant are raising concerns about how economies could suffer. Experts argue that societies are better equipped to deal with the virus now compared to the first Covid lockdowns, but market players have been on edge with the prospect of further restrictions.
ECB
Nonetheless, consumer prices rose once again in the euro zone off the back of higher energy costs and supply chain issues.

In Germany — a country historically scared of high inflation — the inflation rate hit a 29-year high in November. They were up by 6% from a year ago, as measured by the harmonized index of consumer prices.

The trend is the same in France, where the inflation rate reached 3.4% in November, the highest reading since 2008.

The question going forward is how the ECB will square the high inflation readings with uncertainty over the pandemic.

ECB Vice President Luis de Guindos said last week that the central bank still plans to end its emergency bond purchases program in March. However, market players want to know how the central bank will be adjusting its other tools.

“The Omicron variant has increased the level of uncertainty even further but for now we suspect that it will have a fairly small impact on inflation,” Jack Allen-Reynolds, senior Europe economist at Capital Economics, said in an emailed note to clients.

On the other hand, Rupert Thompson, chief investment officer at wealth manager Kingswood, said the latest figures make it more likely that the ECB will have to reduce monetary stimulus.

“Euro zone inflation now looks set to remain well above the ECB’s 2% target for much of next year and these numbers will make it all the harder for the central bank to justify continuing its QE [quantitative easing] program and holding off on any rate rise before 2023,” he said.

In addition, Charles Hepworth, investment director at GAM Investments, said: “It may be wishful thinking on the part of ECB President Lagarde when she declares that price pressures won’t run out of control – they already are and it’s difficult to follow the argument that it will abate soon.”

SOURCE: CNBC

Russia would pay a high price for any new military aggression against Ukraine, NATO and the United States warned on Tuesday as the Western military alliance met to discuss Moscow's possible motives for massing troops near the Ukrainian border.

President Vladimir Putin countered that Russia would be forced to act if US-led NATO placed missiles in Ukraine that could strike Moscow within minutes.

Ukraine, a former Soviet republic that now aspires to join the European Union and NATO, has become the main flashpoint between Russia and the West as relations have soured to their worst level in the three decades since the Cold War ended.

"There will be a high price to pay for Russia if they once again use force against the independence of the nation Ukraine," NATO Secretary General Jens Stoltenberg told reporters.

US Secretary of State Antony Blinken echoed Stoltenberg, saying: "Any escalatory actions by Russia would be a great concern to the United States..., and any renewed aggression would trigger serious consequences."

Tensions have been rising for weeks, with Russia, Ukraine and NATO all staging military exercises amid mutual recriminations over which side is the aggressor.

Putin went further than previously in spelling out Russia's "red lines" on Ukraine, saying it would have to respond if NATO deployed advanced missile systems on its neighbour's soil.

"If some kind of strike systems appear on the territory of Ukraine, the flight time to Moscow will be 7-10 minutes, and five minutes in the case of a hypersonic weapon being deployed. Just imagine," the Kremlin leader said.

"What are we to do in such a scenario? We will have to then create something similar in relation to those who threaten us in that way. And we can do that now," he said, pointing to Russia's recent testing of a hypersonic weapon he said could fly at nine times the speed of sound.

EU and other Western leaders are involved in a geopolitical tug-of-war with Russia for influence in Ukraine and two other ex-Soviet republics, Moldova and Georgia, through trade, cooperation and protection arrangements.

SOURCE: REUTERS

Islamabad: Two weeks after passage of bills related to electoral reforms from joint sitting of the Parliament, the federal cabinet on Tuesday viewed that the Election Commission of Pakistan (ECP) was bound to hold all the next elections including by-polls through the Electronic Voting Machines (EVMs).

“The cabinet while discussing the most important decision on the EVM opined that after amendment in the [election] laws, it is mandatory for the election commission to hold all next by-polls through EVMs,” Minister for Information and Broadcasting Chaudhry Fawad Hussain told the media persons after the meeting chaired by Prime Minister Imran Khan.

“If elections are not conducted through the EVMs, there is another opinion that the government will not be able to fund them,” he said, explaining the existing election laws that only gave legitimacy to the polls via the machines.

He said Federal Minister for Law and Justice Dr. Muhammad Farogh Naseem was of the view that on prima facie, the government could only give funds to the ECP for elections if that were held through EVMs.

The government had formed a committee in that regard and the law ministry would give its opinion on the matter, Fawad added.

The minister said the ECP should ensure use of the EVMs in all the next elections as the Parliament had given mandate in that regard.

Special Assistant to the Prime Minister on National Health Services Dr Faisal Sultan and Minister for Planning Development & Special Initiatives Asad Umar briefed the federal cabinet on new variant of the coronavirus (Omicron).

It was told that new variant’s transmissibility was fastest among other kinds of the coronavirus and spreading at tenfold pace in those countries where it had been reported.

Lethality of variant and efficacy of vaccine against this variant was yet to be known, he said, adding the federal Cabinet was told that those factors would be determined by next two to three weeks.

The Federal Cabinet has requested the provincial governments to revamp their vaccination drives and appealed to the public to get inoculated at the earliest so that this new variant could be dealt in a way as those of its previous kinds that were tackled in an effective way.

He said the arrival of Omicron was imminent as the steps taken by the government could only delay it for a brief moment of time.

Most important thing to deal with this variant was mask wearing and vaccination of the leftovers, he added.

Fawad said the Federal Cabinet had expressed serious reservations over the videos circulating on the social media networking sites showing that votes were being bought for the upcoming by-election in Lahore.

He said such illegal activities did not come to the fore in the by-election, if steps were taken by the ECP against horse trading in the recent Senate election.

The free and fair polls were lifeline of a democratic system where elections were the basis for formation of government, he said, highlighting the national election watchdog’s effective and important role in that regard.

He urged the ECP to take the matter of purchase of votes by specific political parties in Lahore to a logical conclusion.

Fawad said the Federal Cabinet was briefed by Minister for Science and Technology Shibli Faraz in detail about total number of required EVMs for the elections.

He said formalities for receiving $3 billion dollars in safe deposits and $1.2 billion worth of oil supplies on differed payment from Saudi Arabia had been completed.

The ITFC (International Islamic Trade Finance Corporation) had given additional $762 million to Pakistan which would ensure stability of rupee against dollar, he added.

The minister said a presentation on weekly prices of kitchen items was also given to the Federal Cabinet and it was noted that there had been a steady decline in commodities prices.

Price of sugar had seen substantial decrease in the last one month, he said, lashing out at the Sindh government for delaying crushing of sugarcane’s crops which caused increase in the price of sweetener.

He said prices of essential commodities in Karachi and Hyderabad were quite high which required urgent attention of the Sindh government.

It was Karachi which played major role in fluctuation of the Sensitive Price Index, he added. Chaudhry Fawad Hussain said that with the increase in rice production, the country was likely to earn $4.75 billion foreign exchange. The weekly presentation of kitchen items given to the cabinet transpired that the prices of essential were on declining trend, he added.

He said it showed that 0.67 percent decrease had been registered in prices of essential items of daily use in recent days. In only month period sugar price had come down to Rs 60 per kg, he added.

He blamed Sindh government for increase in Sugar price. “Inflation is rampant in the cities like Karachi and Hyderabad,” he said adding that PTI government was being portrayed as inexperienced party but the party governing the province for over 30 years had failed to check food inflation.

The 40 percent upward trend in sensitive price index (SPI) was due to inflation in Karachi and Sindh, he said adding that the price of tomato had registered 15.4 percent decrease, onion price by 7.4 percent and chicken price had decreased by 6.6 percent recently. Wheat flour bag price had decreased by one percent, he added.

He said Liquefied Petroleum Gas price had decreased by 0.7 percent . Also the country has produced 9 million matric ton rice this year.

The cabinet observed that the Kitchen items were cheapest in Pakistan as comparing to the entire region. The government was doing utmost to minimize the impacts of global inflation, he said.

The minister said in Rawalpindi, Gujranwala, Lahore, Multan, Faisalabad a flour bag was available at Rs 1,100 per bag, and same was available at Rs 1,404 per bag in Karachi and Rs 1,443 at Hyderabad due to bad governance of Pakistan Peoples Party’s government.

He said in international market, a sack of urea was available at Rs 10,500 per bag, adding that it was available at Rs 1,700 per bag in Punjab.

A smuggler fetched upto Rs 7 million for smuggling a truck of urea from Pakistan to any other country, he added.

The minister said it was noted that the consumption of urea had abruptly increased in Sindh by 53 percent in last six months. It showed that hoarding was rampant in the province and smugglers were being facilitated in the province, he said, adding
due to this reason Punjab’s farmer was suffering and buying urea from black market. The Sindh government must check the hoarding to provide solace to farmers, he said.

The minister said PTI government had launched a crackdown against hoarders in Punjab, which helped decreasing the price of urea by Rs 400 per bag in the province. Some 347 FIRs were registered against hoarders and 244 were arrested, 21,101 inspections were conducted and 480 warehouses were sealed and Rs 30 million fine was imposed on hoarders in Punjab, he added.
Fawad said in contrary, Sindh government did nothing to check hoarding due to involvement of members of the sitting government.

Divulging cabinet decisions, he said Petroleum Division briefed the cabinet about vacant posts of Managing Director and Chief Executive Officers in the division and attached departments and appraised the cabinet that the appointment process on four vacant posts was continuing.

The cabinet tasked Special Assistant to Prime Minister on Climate Change Malik Amin Aslam to devise a long term policy to control smog on permanent basis, he added.

The minister said the cabinet okayed enhancing visa duration of Tablighi Jamat from 120 to 150 days, besides providing them E-Visa facility.

Chaudhry Fawad Hussain said that Rana Shamim had stated in Islamabad High Court that the circulated affidavit was not issued by him. The question was that how affidavit was published in newspapers, he said, adding it was assumed that Nawaz Sharif was involved in the publication of Shamim’s affidavit.

He said some media persons were involved in the campaign launched against judiciary and army and hoped that the court would take the issue to the logical conclusion.

To a question, the minister said the protest campaign of opposition was seasonal and indeed their own workers did not toing the line of opposition.

He said the price of lentils including Channa and Mong were Rs 115 and 142 per kg respectively in different cities. The same lentil (Channa) were available in Karachi at Rs 195 per kg and Rs 159 kg in Hyderabad.

Giving comparison of tea prices, Fawad said tea was available in Pakistan at Rs 1,309 per kg. Whereas the per kg of tea in Bangladesh was Rs 897, India 1,203, Srilanka Rs 1,170.

The minister warned that our gas reserves were fast depleting and we had to evolve an alternative strategy to deal with the situation.

He said under the gas load management plan, gas supply to the CNG sector would remain suspended from December 1 to February 15, 2022.

He, however, said gas supply would be fully provided to the Independent Power Producers, fertilizer companies and export oriented industries. 

The minister said five percent additional gas would be provided to the power plants being operated on the LNG. He said the gas saved from the CNG, cement and Captive Power Plants would be provided to the domestic consumers.

Fawad said the use of electricity was also being encouraged in the winter season and its tariff had been reduced for domestic consumers in order to entice them to shift their appliances such geysers and heaters to electricity.

SOURCE: APP