Train at a platform in Berlin Central Station
A special €9 monthly ticket for travel on most trains is one of the government measures that has helped put a lid on inflation in Germany © Annegret Hilse/Reuters

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Finally some better news in the fight against inflation. Germany reported today that CPI fell from 8.7 per cent last month to a better than expected 8.2 per cent in the year to June, helped by government measures such as cuts in fuel taxes and a special discount on public transport.

The data was not yet a turning point, “but rather evidence that it is currently governments and not central banks that can bring down inflation”, said Carsten Brzeski, head of macro research at ING.

The news contrasted sharply with data from Spain earlier in the day that showed prices rising at their fastest rate for 37 years, hitting 10 per cent in June, driven by surges in energy and food. The underlying rate, excluding these two volatile items, hit 5.5 per cent — the country’s highest level since 1993.

Prime Minister Pedro Sánchez has announced proposals to extend and increase Spain’s €16bn package of relief by €9bn, including reductions in electricity tax and public transport costs, help for pensioners and one-off payments for lower earners.

The easing of inflation growth in Germany will be given a cautious welcome by European Central Bank policymakers at their forum for central banks in Sintra, Portugal.

Yesterday, ECB president Christine Lagarde hardened its message on inflation, saying the central bank would act in “a determined and sustained manner”, especially if price expectations rose sharply among consumers and businesses.

Today, she added: “I don’t think we are going to go back to that environment of low inflation . . . there are forces that have been unleashed . . . that we’re facing now that are going to change the picture and the landscape within which we operate.”

Inflation data for the combined eurozone are expected to hit a new record of 8.3 per cent when released on Friday.

The ECB is planning to start raising interest rates in July for the first time since 2011, beginning with a quarter percentage point increase, followed by a bigger rise in September. However, its new tool to address fragmentation of financial markets across the eurozone could spark a new crisis if it comes up short, argues commentator Megan Greene.

US Federal Reserve chair Jay Powell also spoke at a panel discussion at Sintra ahead of tomorrow’s core personal consumption expenditure data, the Fed’s preferred measure of inflation.

Powell said the US economy was in “great shape” but warned: “If you look across the broad scope of short, medium and long-term expectations, you’d still say that we have credibility [and] that they are well anchored, but there’s a clock running here.”

Examine country by country data with our global inflation tracker

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Need to know: the economy

G7 countries have agreed to do more to prevent Russia profiting from soaring energy prices. Here’s our explainer on their plan. The UK said it would cut off gas supplies to mainland Europe if it was hit by severe shortages. However, blocking the two-way interconnector pipelines risks undermining international co-operation on energy.

Latest for the UK and Europe

The UK said it would extend tariffs on steel imports for two years to protect domestic manufacturers in a move that risks a legal challenge from the World Trade Organization.

The UK is also having second thoughts about imposing a windfall tax on electricity generators. Electricity distributors, however, have been targeted by the energy regulator, which ordered them to invest more while keeping customer charges stable.

Trade body UK finance warned of a fraud “epidemic” after a surge in scams where victims are tricked into parting with their cash. Consumer editor Claer Barrett examines why the country is so susceptible and what can be done about it.

Businesses in Northern Ireland say Westminster’s intention to rip up post-Brexit trading arrangements, which have helped the province’s economy outperform much of the rest of the UK, will do real damage.

UK public finances have been given a boost by the rise in inflation, writes economics editor Chris Giles, but the temporary advantage will soon be lost under the pressure of rising debt interest payments, falling wages and pressure on service.

Our latest Big Read is an investigation into how Russia is exporting food out of Crimea in defiance of international sanctions.

Satellite imagery showing Russian ships moored at Sevastapol in Crimea
© FT/Planet Labs

Global latest

The G7 was accused of “backsliding” on climate goals as member countries attempt to beef up energy security. Criticism is particularly strong in the UK, where a parliamentary report said there was “scant evidence” of the government implementing climate change targets. The EU, meanwhile, is pushing ahead with measures, including a ban on the sale of combustion engines by 2035.

ExxonMobil chief executive Darren Woods told the Financial Times that investment in fossil fuel production would enjoy a resurgence as global efforts to cut production ran ahead of efforts to cut consumption, pointing to an “optimistic view” of the speed of the transition to cleaner energy.

Our new newsletter The Climate Graphic: Explained, which launches on Sunday, helps you understand the most important climate data of the week, with insight and analysis from FT specialists. Sign up here

After the period of liberalisation from the late 1940s to the 1970s and the “neoliberalism” that began in the 1980s, we are now experiencing a new era of world disorder, says chief economics commentator Martin Wolf. Open trade is now at risk, he argues, unless action is taken to shore up the global commons.

China has halved quarantine restrictions for international travellers to one week as it tries to revive an economy badly hit by pandemic curbs. The country’s Covid health apps have been criticised for being used as “digital handcuffs”, or tools of social control.

On the other hand, the erosion of wider freedoms in Hong Kong is doing little to deter companies and investors, says Beijing bureau chief Tom Mitchell. Meanwhile, the city’s elite are snapping up bargain properties in Tokyo.

Graphic showing how health codes have become central to life in China

Need to know: business

Hedge fund manager and renowned short seller Jim Chanos is betting against “legacy” data centres, which he predicts will fall victim to cloud services from the trio of Amazon Web Services, Google Cloud and Microsoft Azure.

The latest casualty of turbulent markets is Walgreen’s sale of the UK’s Boots pharmacy chain, which has been pulled because of a lack of suitable offers. Boots accounts for about 5 per cent of Walgreen’s yearly sales of $132bn.

More encouraging were results from H&M, the world’s second-largest clothing retailer, which beat quarterly profit expectations by cutting back on discounts. Chief executive Helena Helmersson said supply chains were still strained and that ending activity in Russia, Ukraine and Belarus would account for 5 percentage points of an expected 6 per cent year-on-year decrease in June sales.

The shift to electric cars is putting more than 20,000 UK jobs at risk, the industry’s trade association has warned, as jobs in engines, exhaust systems and fuel tanks fall by the wayside while the country gears up for the end of petrol and diesel-powered vehicle sales by 2035. A UK start-up is set to become one of Europe’s first refineries for lithium, one of the key materials used in electric car batteries.

London’s Heathrow airport was ordered by the UK regulator to cut its landing charges after a big row with airlines. Business columnist Helen Thomas says the system of allocating take-off and landing slots needs an overhaul.

It’s all smiles at the top end of the aviation market though, at least in the US, as company spending on private jets for personal use has hit a 10-year high.

The World of Work

Positive employment trends for young women are masking a rise in the proportion of inactive young men, writes employment columnist Sarah O’Connor on the changing demographics of the UK workforce.

If you often feel underqualified and plagued by self-doubt at work, you may be suffering from imposter syndrome. In our latest Working It podcast, Isabel Berwick and guests discuss how in some cases it might actually improve your performance.

Covid cases and vaccinations

Total global cases: 538.9mn

Total doses given: 12bn

Get the latest worldwide picture with our vaccine tracker

And finally . . . 

Ever suffer from jet lag? Here are some tried and tested tips from a source you can trust: a long-haul airline pilot.

Illustration of an airline cockpit appearing to have sleepy eyes
A pilot’s guide to beating jet lag © Universal Images Group/Getty

Working it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up here

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