MAGGIE PAGANO: Peak inflation has passed

Inflation has reached its peak. Famous last words, but that’s the strong signal from November’s inflation data, which showed the sharpest fall in 16 months to 10.7 percent.

It’s still eye-wateringly high, but a much bigger dip than most forecasters expected.

Lower energy prices have been the main factor as crude oil costs have fallen from a peak of $120 in the spring.

This has reduced the cost of domestic transportation and production costs, driving down the prices of goods from clothing to footwear. And the declines are significant: fuel prices are down 5 percent year-on-year.

Following the fall in US inflation this week, it seems clearer that prices are falling as supply chain bottlenecks caused by the long lockdown – and essential food shortages due to war in Ukraine – are easing.

Shipping freight rates, always a good indicator of what’s happening globally, are falling.

Rates fell 21 percent to $2,607 FEU — that’s for a 40ft container — in November, the lowest since December 2020, as demand has slowed and congestion has improved, according to Freightos data.

This is 72 percent lower than a year ago, although it is still double the level of 2019. US tariffs on major shipping routes between China and the West Coast have fallen to pre-pandemic levels.

The big question for the global economy is what happens when China opens next year once Covid restrictions are eased.

That should restart the production machine and boost domestic demand. The signs are that supply in the West is greater than demand.

That’s why rate hike pressures are slowing as the Fed Reserve limits its hike to 0.5 percentage points.

This, in turn, takes the foot off the accelerator at the Bank of England and the European Central Bank, both meeting today. The BoE’s monetary policy committee is divided, but the consensus is for an increase to 3.5 percent.

A more cautious approach will be cushioned by the pound’s rise against the dollar to $1.24, its highest level since Boris Johnson was prime minister.

Still, falling inflation is unlikely to make the wage demands of the striking unions any less hot. Wage claims in both the private and public sectors still average only 4 percent, lowering workers’ living standards. Increasing productivity is key.

Another more worrying factor is that energy subsidies will be cut in March.

More than half of small businesses say they’ll face energy bills after April, another reason the government needs to put on the skates and provide an idea of ​​the shape of future subsidies.

Instilling confidence is crucial in such a delicate yet positive moment.

War against Woke

Company bosses claim doing business is getting harder because of pressure from social justice campaigners who want them to do more to defend their causes.

Here’s some advice: ignore them.

If they need to arm themselves for battle, they should read Vivek Ramaswamy’s brave book, Woke, Inc: Inside Corporate America’s Social Justice Scam, for ballast.

The Yale lawyer-turned-health tycoon made waves with his claims that by mixing morality with consumerism, bosses try to sneak into our souls and sell us even more.

By selling certain social causes alongside their products, as Ben & Jerry’s tries to do with their ice cream, corporates try to give consumers meaning in their lives.

And it’s a dangerous pursuit. As Ramaswamy puts it, “Big business uses progressively friendly values ​​to divert attention from their own monolithic pursuit of profit and power.”

Bosses who signal virtue “educate” their staff according to the latest gender or diversity trends. If justice is so important to campaigners, they’re better off digging through corporate balance sheets to explore meatier issues like pricing or monopolies. And bosses need to grow a spine.

Go Marta

Marta Ortega, daughter of Zara founder Amancio Ortega, has had a great start as head of fashion giant Inditex.

She took over in April and has seen a 24 percent increase in net profit in the first nine months.

It’s a great achievement considering the state of the market, but the designers are amazingly adept at producing beautiful, affordable high fashion.

While Inditex raised prices, Ortega kept them below those of the wider market without compromising on high design and quality.

Congratulations!