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The Dow Jones Industrial Average plunged more than 500 points on Tuesday after hot inflation data for January dimmed hopes that the Federal Reserve would begin cutting interest rates next month.

The Dow, which tumbled as 750 points, slid 1.4% — its worst day since since March 2023. The S&P 500 slipped 1.4%, while the tech-heavy Nasdaq Composite fell 1.8%.

Both the Dow and the S&P 500 had hit record highs this year before plunging following the release of the Consumer Price Index, which rose a stiffer-than-expected 3.1% on an annual basis.

The figure — which tracks changes in the costs of everyday goods and services — remains far off from the Fed’s 2% target.

Core CPI a number that excludes volatile food and energy prices increased 0.4% in January, to 3.9%.

The figure, a closely-watched gauge among policymakers for long-term trends, was also higher than what economists anticipated.

“Inflation staying sticky is everyone’s biggest fear and this report is showing its not going down,” Chris Zaccarelli, the chief investment officer of Independent Advisor Alliance, said. “The knee- jerk reaction is for stocks and bonds to sell off. That makes sense. Then we’ll wait for the next report and if that’s lower this will turn out to be just a blip.”

The increase could delay the prospect of three interest rate cuts the Fed anticipates to make in 2024.

Wall Street had initially expected that the first time rates were brought down from their current 22-year high would be in March.

Fed Chair Jerome Powell said after the latest policy meeting that “it’s not likely that this committee will reach that level of confidence in time for the March meeting.”

The CME FedWatch Tool shows that a May rate is also largely off the table.

The probability of a May rate cut slumped from 52.2% to 36.6% on Monday while the chance of a slash in June now stands at 78.6%, down from 92.2%.

Atlanta Fed President Raphael Bostic, who is voting on the Federal Open Market Committees policy decisions this year, told CNN that he’s anticipating the first of three cuts to take place in the fourth quarter — weeks after the mid-year slowdown Wall Street is now expecting.

By the end of the year, inflation will be near “the lower twos,” he said.

This isnt a TikTok video or something like that where you get trends happening so fast. It takes a while for the decisions of individual decisions and millions of people to come together and to start to create trends, he told CNN.

At the same time, theres a significant risk if the Fed leaves interest rates where they currently are for too long, Bostic warned.

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He also noted how difficult it’s been to tamp down inflation as the job market has remained surprisingly strong.

Januarys monthly jobs report added a blockbuster 353,000 new jobs to the economy — nearly double analysts’ expectations. 

Although inflation appears to be slowing, the economy remains Americans overall top concern, cited by 22% of poll respondents, as they have struggled with inflation and other aftershocks of the COVID-19 pandemic, according to a Reuters/Ipsos poll released last month.

Since taking office, Biden has made a pitch for lower supermarket prices, pushed drug makers to lower insulin costs, hotel chains to reduce fees and tried to diversify the meat-packing industry after beef prices skyrocketed in the aftermath of the pandemic.

Alfredo Ortiz, president and CEO of Job Creators Network, told The Post in a statement that “inflation remains historically high and is nothing to cheer about.”

“Talk to any American going to the grocery store, hardware store or pharmacy, and they’ll tell you prices continue to rise at a painful rate.”

A December 2023 report on shrinkflation — when businesses cut product sizes but keep prices the same — found that household paper products were 34.9% more expensive per unit than they were in January 2019, with about 10.3% of the increase due to producers shrinking the sizes of rolls and packages.

Researchers also found that the price of snacks like Oreos and Doritos had gone up 26.4% over the same period, with shrinking portions accounting for 9.8% percent of the increase.

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Entertainment

Disgraced singer Gary Glitter to stay in jail as parole bid refused

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Disgraced singer Gary Glitter to stay in jail as parole bid refused

Gary Glitter will stay in prison after the Parole Board refused the disgraced singer’s bid to be released.

Glitter, 81, was recalled to jail less than six weeks after he was released halfway through his 16-year sentence in 2023 for breaching his licence conditions by allegedly viewing downloaded images of children.

He was sentenced to 16 years imprisonment in 2015 after being found guilty of sexually assaulting three schoolgirls between 1975 and 1980.

The Parole Board last year said it was “not satisfied that release at this point would be safe for the protection of the public” after a hearing held behind closed doors.

Pic: PA
Image:
Glitter was jailed in 2015 Pic: PA

A spokesman on Tuesday said his release was refused again following a “paper review”.

“Parole Board decisions are solely focused on what risk a prisoner could represent to the public if released and whether that risk is manageable in the community,” a statement said.

“A panel will carefully examine a huge range of evidence, including details of the original crime, and any evidence of behaviour change, as well as explore the harm done and impact the crime has had on the victims.

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“Parole reviews are undertaken thoroughly and with extreme care. Protecting the public is our number one priority.”

Glitter, whose real name is Paul Gadd, will be eligible for a further review at a date set by the Ministry of Justice. His sentence expires in February 2031.

He was made bankrupt earlier this year after failing to pay more than £500,000 in damages to a woman who sued him for abusing her when she was 12 years old.

Richard Scorer, head of abuse law and public inquiries at Slater and Gordon, who represented the woman, told Sky News the Parole Board has made “the right decision”.

He added: “My client is relieved at this ruling but apprehensive about having to go through the merry-go-round of Gadd coming up for parole again, and the fear of him being let out on licence.

“This is unfair on victims and it would be better if they were assured that he would serve the rest of his sentence.”

Read more from Sky News:
Man jailed for murdering two women on Christmas Day
Ex-lawyer ‘fears revenge over gang boss murder claim’

Glitter was first jailed for four months in 1999 after he admitted possessing around 4,000 indecent images of children.

He was expelled from Cambodia in 2002, and in March 2006 was convicted of sexually abusing two girls, aged 10 and 11, in Vietnam, where he spent two-and-a-half years in prison.

Glitter was automatically released from HMP The Verne, a low-security prison in Portland, Dorset, in February 2023 after serving half of his fixed-term determinate sentence.

But he was back behind bars weeks later after reportedly trying to access the dark web and images of children.

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Business

Bosses of Octopus Energy and SSE clash over ‘postcode pricing’ proposals

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Bosses of Octopus Energy and SSE clash over 'postcode pricing' proposals

The head of Britain’s biggest energy supplier has claimed his competitors oppose proposals for so-called postcode pricing because they financially benefit from the current system.

Octopus Energy chief executive Greg Jackson told Sky News his business’s rivals were against customers being charged based on where they lived, rather than on a national basis, because they would lose out on profits.

He said: “A very small number of companies that today get paid tens of millions, sometimes in a single day, to turn off wind farms and generate gas elsewhere, don’t like it.

“The reason you’re seeing that kind of behaviour from the rivals is they are benefiting from the current system that’s generating incredible profitability.”

The government is currently considering whether to introduce the policy, which is also known as zonal pricing. Energy secretary Ed Miliband is expected to make a decision on the proposals by this summer.

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Octopus has become Britain’s biggest supplier with more than seven million customers.

Mr Jackson has been a vocal proponent, as he said he wants to charge customers less and boost government electrification policies by having cheaper electricity costs.

What is postcode pricing?


Business reporter Sarah Taafe-Maguire

Sarah Taaffe-Maguire

Business and economics reporter

@taaffems

Zonal pricing would mean electricity bills are based on what region you live in.

Some parts of Britain, like northern Scotland, are home to huge energy producers in the form of offshore wind farms.

But rather than feeding electricity to local homes and businesses, power goes into a nationwide auction and is bought to go across Britain.

As the energy grid is still wired for the old coal-producing sites rather than the modern renewable generators, it’s not straightforward to get electricity from where it’s increasingly produced to the places people live and work.

That leads to traffic jams on the grid, blocking paid-for electricity moving to where it’s needed and a system where producers can be paid a second time, to power down, and other suppliers, often gas plants, are paid to meet the shortfall.

Zonal pricing is designed to prevent paying the generators for power that can’t be used.

It would mean those in Scotland have lower wholesale energy costs while those in the south, where there is less renewable energy production, would have higher wholesale costs.

Whether bills go up or down depends on implementation.

Savings from one region could be spread across Britain, lowering bills across the board.

Mr Miliband has said he’s not going to decide to raise prices.

However, SSE’s chief executive Alistair Phillips-Davies described the policy as a “distraction” and said it could affect already agreed-upon upgrades of the national grid that will lower costs.

“I think you’ve got a very, very small number of people who are asking for this. It’s just a distraction. We should remove it now,” he said.

While Octopus Energy estimates that said postcode pricing could be introduced in two to four years, Mr Phillips-Davies said it could take until 2032 before it was implemented, by which time Britain would have “built much of the networks that are required to get the energy from these places down into the homes and businesses that actually need it”.

“We just need to stay true to the course,” he added.

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Unions, as well as industry and energy representatives, have also spoken out against the policy. Opponents include eco-tycoon Dale Vince and trade body UK Steel.

A joint letter signed by SSE, UK Steel, Ceramics UK and British Glass, along with the unions GMB, Unite and Unison, said zonal pricing could lead to scaled-back investment due to uncertainty and higher bills.

A separate letter signed by 55 investors, including Centrica and the Ontario Teachers’ Pension Plan, has also criticised the policy.

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Businesses facing fresh energy cost threat

However, Mr Jackson said many investors had not voiced opposition, with thousands of small and medium businesses instead backing the policy in the hope of paying less on energy bills.

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Politics

The crypto fund domicile decision: EU or the UK?

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The crypto fund domicile decision: EU or the UK?

The crypto fund domicile decision: EU or the UK?

As the EU’s MiCA regulation and the UK’s evolving crypto laws diverge, fund managers face a key choice: to opt for the EU’s legal certainty and passporting or the UK’s flexible, innovation-driven approach.

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