Finance and Economic

A round of confidence-building corporate deals supported global stocks Tuesday, despite fresh tightening measures in China as inflation there jumped to a three-year high and another savage credit rating downgrade of Greece.

Over the past two months, the economic news flow has turned distinctly negative, particularly from the U.S., and many investors think the surge in share prices in the early part of the year may have been overdone.

Some relief came from corporate deals that prompted investors to look for potential takeover targets. In particular, news that Avis Budget has agreed to buy its European counterpart Avis Europe in a $1 billion deal has helped fuel hopes that further corporate activity will emerge in the days to come, especially now that many companies have shored up their cash positions following the recession.

“Companies with healthy balance sheets are clearly looking for sound investments,” said Will Hedden, sales trader at IG Index.

Though Avis Europe is not part of the FTSE 100 of leading British shares, its takeover helped buoy sentiment and the index was up 0.4 percent at 5,797. Germany’s DAX was 1.6 percent higher at 7,197 while the CAC-40 in France rose 1 percent to 3,846.

Wall Street was poised for a solid opening, too _ Dow futures were up 0.6 percent at 11,954, while the Standard & Poor’s 500 futures rose 0.8 percent to 1,276.

How the U.S. opens could well hinge on retail sales figures, which are released an hour before the bell. U.S. retail sales figures for May will provide an insight into the state of the U.S. economic recovery _ consumer spending accounts for around 70 percent of the U.S. economy.

Expectations are not rosy. The headline figure is expected to show a monthly 0.4 percent decline, which if true would represent the first decline since last June. However, when car sales are stripped out, U.S. retail sales are expected to rise by 0.3 percent.

In currency markets, investors continue to monitor developments surrounding the Greek debt crisis ahead of next week’s meeting of eurozone finance ministers in Brussels, where a fresh Greek bailout is on the agenda.

An unscheduled meeting of the eurogroup ministers Tuesday has stoked speculation that they are preparing to work out a way for the private sector to increase its share in helping Greece, a move the European Central Bank has so far opposed. The meeting takes place just a day after Standard & Poor’s downgraded its rating on Greece’s debt to triple C, the lowest of any sovereign in the world.

Tuesday’s meeting takes place amid signs that policymakers in Europe have divergent views on how to deal with the Greek crisis, with the European Central Bank and the German government, in particular, at odds on getting Greece’s bondholders to share the burden of the bailout.

By late morning London time, the euro was 0.2 percent firmer at $1.4439.

Earlier in Asia, Japan’s Nikkei 225 index rose 1.1 percent to close at 9,547.79 while South Korea’s Kospi rose 1.4 percent to 2,076.83. Hong Kong’s Hang Seng fell less than 0.1 percent to 22,496.

In mainland China, shares advanced after the government announced that inflation in May was 5.5 percent. Though that was the highest in almost three years, it was not as high as some forecasts had suggested. The benchmark Shanghai Composite Index gained 1.1 percent to 2,730.04, while the Shenzhen Composite Index of China gained 1.6 percent to 1,128.42.

Even though headline inflation did not rise as much as anticipated, China’s central bank increased the reserves banks are required to hold by a further 0.5 percentage point to a record 21.5 percent of deposits. The sixth increase this year is designed to help keep a lid on inflation.

There was some relief in the markets that China did not raise interest rates though that is expected to happen again soon.

“Although Chinese tightening is not generally welcomed by the markets, a gradual slowdown in the economy is a far better scenario than a hard-landing,” said Jane Foley, an analyst at Rabobank International.

Oil prices recouped some recent lost ground though fears over the pace of the global recovery remain.

Benchmark crude for July delivery was up 99 cents to $97.39 in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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Conrad Black is contesting the testimony of two prison workers who said he shirked tutoring responsibilities and used other inmates as servants during his time at a Florida prison, as his conduct behind bars comes under scrutiny ahead of his resentencing later this month.

Affidavits by two employees filed with a U.S. federal court in Illinois suggest the former media baron wasn’t the model inmate his defence team has painted him to be in its petition to the court arguing that Black should not return to jail.

The scathing reports will be considered when Judge Amy St. Eve, who presided over Black’s original trial in 2007, hears arguments later this month on whether Black should return to jail on two remaining convictions.

But Black said Monday the officials’ testimony is at odds with evidence from other sources provided to the Probation Office and “will be rebutted at the appropriate time by appropriate people.”

“They are indicative of the deterioration of the government’s case …, ” he said in an email to The Canadian Press.

In one of the affidavits, a unit manager at the Coleman complex says Black demanded special treatment and gathered an entourage of inmates who acted like servants for him.

“Those inmates cooked for Black, cleaned for him, mopped his floor, ironed his clothes and other similar tasks. That is not at all frequent at Coleman,” Tammy Padgett said in the document.

She added that Black’s assigned case manager reported that he demanded to be called Lord Black the day he was released on bond last summer, awaiting the outcome of an appeal.

“Black told (her) words to the effect of ‘I believe I should be addressed as Lord Black from this point forward,’” she said.

In another document, Carrie De La Garza, an education specialist who supervised Black as a tutor, claimed he was a haughty and uninterested mentor.

“He projected the attitude that he was better than others in the class, both faculty and students. A lot of the inmates looked up to him, and there were some who saluted him each day in class,” she said in the sworn testimony.

De La Garza claimed Black was frequently late and often read or worked on writing what appeared to be a book while he was supposed to be teaching.

“In addition, Black elected to take a piano class, which caused him to miss parts of the GED (General Educational Development) classes. Of the three tutors assigned to my class during the time Black was an inmate at Coleman, Black put in the fewest hours,” she said.

De La Garza’s depiction of Black’s time as a tutor disputes his defence team’s claims, which argue in its court filings that his contributions to the community “were nothing short of extraordinary.”

“Few indeed could take credit for guiding more than 100 GED candidates to graduation, and Mr. Black’s work with his colleagues to more than double the number of graduates (including several who had been written off as hopeless causes) is truly commendable when one considers the very difficult circumstances he faced,” the defence filing said.

However, De La Garza refuted the claim with figures showing there had been no increase in the graduation rate of the prison’s students, instead saying there has been a decline to 81 in 2010 from 87 in 2007.

Black’s lawyer, Miguel Estrada, earlier filed documents in advance of Black’s resentencing that tout his contributions to the community during his 2.5 years at Coleman, and his continuing support of those students since his release last summer.

“Mr. Black stared into the darkest and most devastating period of his life and found the power to improve the lives and opportunities of those whom he encountered,” the filing said.

“He did so quietly, humbly, and with no effort to draw attention or praise to his accomplishments.”

Black, who had been serving a 6.5-year sentence in the U.S. federal prison, has been freed since last summer after the U.S. Supreme Court curtailed the “honest services” laws used to convict Black of defrauding Hollinger International investors.

An appeals court subsequently reversed two convictions, but upheld two others — on fraud and obstruction of justice. He is scheduled to be resentenced on those charges June 24.

The Supreme Court rejected an appeal of those convictions last week, meaning Black won’t be cleared of the charges, but could remain free if the judge decides to allow him time served on the counts.

The U.S. Attorney believes Black’s original sentence of 6.5 years should be reimposed.

Black’s empire once included the National Post, Chicago Sun-Times, The Daily Telegraph of London and other papers across the United States and Canada.

The Canadian-born businessman was freed on bail from a Florida prison last year while he appealed his conviction for defrauding investors. He had served 29 months of a 78-month sentence for the original four convictions.

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Wal-Mart Stores Inc. unveiled a $15 billion share buyback program Friday as it sought to reassure shareholders at its annual meeting that the world’s largest retailer is still growing.

The buyback will replace a previous $15 billion repurchase plan begun a year ago. The company bought back 244 million shares worth $12.9 billion under that program.

“This reflects the strong financial performance of your corporation,” said Charles Holley, Wal-Mart’s executive vice prsident and chief financial officer in an address to shareholders and associates packed in a University of Arkansa arena about 30 miles from its Bentonville headquarters.

The news comes after the company increased in March its dividend in its current 2012 fiscal year from $1.21 to $1.46 per share, an increase of 21 percent that returned $1.3 billion to shareholders.

The shareholders’ meeting maintained the tradition of being part pep rally, part business, with actor Will Smith serving as master of ceremonies. The 2011 “American Idol” winner, Scotty McCreary, also appeared.

About 16,000 people packed the arena, including Wal-Mart employees from 15 countries.

“You are legendary for your rowdiness,” Smith bellowed in warming up the crowd.

In Wal-Mart’s business, international sales are sizzling, but the company is still trying to reverse a two-year sales slump at home, with no clear sign of when that will happen.

“We made a lot of progress over the last 11 months,” said Bill Simon, president and CEO of Wal-Mart’s U.S. business in an address to shareholders. “We have the right plan.”

He noted that two-thirds of the business has seen gains in a key measure of sales, most of which is coming from groceries.

But he cautioned, “You certainly can’t predict the weather and the economy.”

Wal-Mart’s flagship business is hurting because it’s still smarting from the mistakes it made on pricing and selection more than two years ago. The company has been racing to restock thousands of items it culled as part of its overzealous bid to clean up its stores two years ago. It’s also gone back to its “Everyday Low Price” roots.

Wal-Mart is also battling increasing threats from competitors, particularly online rivals like Amazon.com and dollar chains, which have expanded their assortments and become more competitive on price.

Wal-Mart’s low-income shoppers have also seen their financial problems shift. A year ago, they were worried about losing their jobs. Now, rising gas prices and other household costs are squeezing their budgets and making it tough to stretch their remaining dollars to the next payday.

Thursday’s reports on May sales from major retailers, including rival Target Corp., provided more evidence that inflationary pressures are causing shoppers to pull back on discretionary items like clothing and home goods.

On Thursday, Simon told a media gathering that low-income shoppers are going through a “prolonged malaise.” Such financial woes could stall Wal-Mart’s campaign to turn its U.S. business around.

Wal-Mart’s fears have deep repercussions, because it’s a bellwether of consumer spending and accounts for nearly 10 percent of all nonautomotive retail dollars spent in the U.S.

Shares of Wal-Mart have tracked closer to its profits than its domestic sales this past year, and its robust international business, fueled by Mexico, China and Chile, has propped up revenue and profits. Wal-Mart shares are up almost 4 percent over the past 12 months. But they peaked in late January and have lost almost 7 percent since the company said it would not predict when U.S. revenue at stores open at least a year will begin growing, after setting a target date for last holiday season and missing it. That revenue measure has had eight straight quarters of declines.

Walmart stores account for 62 percent of the company’s revenue, which reached $418 billion in its latest fiscal year ended Jan. 31; international makes up 26 percent.

Walmart’s CEO of the company’s international division attributes its success to focusing on what shoppers want.

“It’s about finding the right item,” said Doug McMillon.

McMillon noted that the company’s fastest-growing division is working to expand its international Internet shopping business and is also growing through acquisitions.

The company is preparing to close on a $2.4 billion purchase of a majority interest in South African retailer Massmart, which operates in 14 countries.

The company’s overall revenue is also getting a lift from its improving Sam’s Club division, which has enjoyed five straight quarters of improving gains in stores open at least a year. Sam’s Club has benefited from better quality merchandise, from higher grade sirloin steak to trendier fashion labels.

To address the increasing threat of dollar stores, Wal-Mart is also opening its first of up to 20 Walmart Express stores planned for this year. These stores are about the size of a typical drugstore.

Many analysts are eager for Wal-Mart to ramp up the expansion of these small stores. Rivals like Dollar General and others have been blanketing areas around the country with their own stores.

Simon told shareholders he’s confident about Wal-Mart’s comeback.

“You better get ready, because we’re coming,” he added.

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Stocks are closing mixed. Weaker-than-expected sales reports from retailers and another large number of claims for unemployment benefits kept stocks wavering between gains and losses throughout the day.

First-time applications for unemployment benefits, an indication of how many people are losing their jobs, fell slightly last week to 422,000. That was more than economists were expecting and well above the 375,000 level that signals that the economy is adding jobs cash advance loan.

The Dow Jones industrial average lost 42 points, or 0.3 percent, to close at 12,249 Thursday.

The S&P 500 lost 2 points, or 0.1 percent, to 1,313. The Nasdaq composite gained 4, or 0.2 percent, to 2,773.

Slightly more stocks fell than rose on the New York Stock Exchange. Trading volume was 3.9 billion shares.

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The first thing Silvia Huelves was told when she started studying architecture was that she should take up Chinese or Japanese _ she was not going to build anything in Spain any time soon.

It wasn’t criticism of her skills but a reflection on the state of the country, where the jobless rate among 16-24-year-olds is a staggering 45 percent and a construction sector slump caused nearly two years of recession.

Now the young people are protesting, roughing it out in improvised camps in the hearts of Spain’s main cities to bring attention to their plight. While they’re angry about lots of things, bleak job prospects and having to live with Mom and Dad well into adulthood are high on the list.

Huelves, a 19-year-old with a big smile, said her professors make no secret of the dire state of things.

“You go in and the first thing they say is ‘forget about it, you are never going to build buildings,’” she said. “They say architecture is really cool and well-rounded and useful for a lot of things, but you are not going to build buildings.”

Construction is no doubt the hardest hit sector in Spain’s battered economy as it tries to recover from a burst real estate bubble. But in almost any line of work Spain’s young people face a dark outlook. The jobless rate in the under-25 age bracket makes the national unemployment rate of 21.3 percent seem mild by comparison. Widen the bracket to the age of 29 and the rate is still a stunning 35 percent.

To voice their discontent, young people have been coordinating over the past two weeks via social media like Twitter and Facebook to set up huge camps in city centers. The camp in Madrid features makeshift clinics and libraries with grungy sofas as well as stands with donated apples and bananas, juice and baguette sandwiches.

“More than anything, this is about being fed up. We are absolutely fed up,” said Maria Martinez, 32, sitting in a lounge chair under blue sheeting protecting the Madrid camp from a blazing midday sun.

Martinez considers herself relatively lucky because she has been jobless for only about two months and has worked since age 17, mainly in factories and offices. But it was always for low wages, sometimes with no benefits and always getting part of her pay under the table.

Martinez rattled off other gripes _ conservative politicians who watched Spain’s real estate market heat up and took credit as GDP rose nicely, banks that helped and profited by providing streams of easy credit, and the current Socialist government that presided over the bubble’s loud pop in 2008, with its disastrous impact on the country.

“I am the first one to acknowledge we have reacted late and we have been asleep for a long time,” Martinez said.

Another jobless protester, Pablo Luna, 27, has a degree in history, just finished a Masters in journalism and says he has zero prospects for work. He said it is virtually unheard of for people to complete their studies and go right into work in their field.

“Of the people I know, no one has done it,” said Luna, an articulate man with a thick, dark, wild pony tail and the rich voice of a radio announcer. “I should be out looking for a job. But my heart tells me I should be here now.”

Much of the problem lies with rigid rules governing Spain’s labor market, in particular the high cost of laying off established, older and less productive workers under legislation that goes back 30 years, said Gayle Allard, a labor market expert at IE Business School in Madrid.

With employers wary of giving new hires open-ended contracts with full benefits, younger workers often end up with temporary ones, sometimes lasting just a few months. In the good days, companies would roll those contracts over, but since recession hit many have just let them run out.

This makes the Spanish jobless rate highly vulnerable to swings in the economy, as nearly a third of all workers have temporary contracts. The jobless rate has more than doubled in about three years, with young people who often earn just euro1,000 ($1,400) a month taking a particularly hard hit.

In the 27 countries of the European Union, as of March of this year the jobless rate for under-25’s averaged about 21 percent, less than half of Spain’s, according to the statistical agency Eurostat. Even the rate in bailed-out Greece is lower, at 36 percent.

Last year the Spanish government passed labor market reforms designed to make it cheaper and easier for businesses to lay off workers and more expensive to use temporary contracts. The idea was to encourage hiring and make employment more stable.

But Allard says the changes are timid and that today’s young Spaniards _ even with foreign language and computer skills _ are still effectively shut out of the labor market.

The effects go beyond protests and rallies to shape the structure of the country’s society.

Spain has one of Europe’s lowest birth rates _ 1.4 children per woman of childbearing age _ in part because it takes so long for young people to get out of their parents’ house, establish a career and start families.

Until that happens, life for many young Spaniards is a sort of limbo.

“They cannot become productive. They cannot use their skills. They cannot save. They cannot invest in housing. They are not accumulating wealth that they can leave off in the future,” said Allard, an American who has lived in Spain for 25 years.

“These kids are paying our pensions and they are not going to have been able to save anything. It is really scary,” Allard said.

Arcadi Oliveres, an applied economist at Autonomous University in Barcelona, said that compared with other European countries Spain offers comparatively little vocational training as an early alternative to going to jam-packed universities.

The result is that Spain churns out legions of university-trained scientists _ who end up unemployed and eventually work in vocational jobs anyway, Oliveres said.

“Unlike a structure that is pyramid-shaped in other countries, here there is a real inflation of university graduates,” Oliveres said. “As a labor market model it is a bit anomalous.”

At the medical school in Madrid Complutense University, 21-year-old Maria Perez is two weeks away from graduating with a degree in podology and she is far from thrilled. Of her immediate circle of 20 friends and close acquaintances, she says three have jobs.

“There is not a lot of reason to celebrate because you know you are going to keep living with your parents and end up working in a grocery store,” she said.

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SAN FRANCISCO

Polish central bank Governor Marek Belka said inflation in the eastern European country will peak within two months and a surprise interest rate increase in May isn’t a start of “a new trajectory” in monetary tightening.

“We are really very close to the peak” of consumer-price growth, Belka said in an interview in the Kazakh capital Astana today. The rate increase wasn’t to signal “a new trajectory of interest rate increases. It’s simply that we want to implement our strategy faster.”

The central bank unexpectedly raised its benchmark seven- day rate by a quarter-point to 4.25 percent on May 11. The bank sought to pre-empt pressure on prices as consumer spending is picking up. The inflation rate rose to a 2 1/2-year high of 4.5 percent last month.

Wage growth is accelerating in Poland, the European Union’s largest eastern member which escaped a recession altogether during the credit crisis. The Polish central bank raised borrowing costs three times since January as policy makers across the globe struggle to curb inflation.

The rate move probably changed perceptions of how fast prices are going to rise and will “moderate” economic growth in Poland, Belka said cash advance. Imported inflation is also eroding the purchasing power of consumers, he said.

‘Hysteria Is Over’

Following the rate increase “we are observing a certain attenuation of inflationary expectations.” Belka said. “The hysteria is over.”

The inflation rate may drop “close” to the central bank’s target of 2.5 percent late next year, Belka said. The rate has been above the bank’s goal for seven months.

Government efforts to limit public spending may help combat inflation in the country, he said.

Even so, Belka said he has “some doubts” the government will be able to reduce the budget deficit to 2.9 percent of gross domestic product as planned next year.

The central bank took the government’s pledge “seriously” that it will implement “additional measures if necessary” to cap expenditures, he said.

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Israel has agreed to transfer to the Palestinians cash it withheld after the rival Palestinian factions signed a unity pact.

Israel collects tax funds and customs fees from Palestinians who work in Israel on the Palestinians’ behalf. It is supposed to transfer the money to the Western-backed Palestinian Authority.

But it held up the transfer this month, saying it feared money would reach militants in the Hamas-ruled Gaza Strip.

Earlier this month, the Palestinian Authority signed a unity deal with the Iranian-backed Hamas, which has killed hundreds of Israelis.

Israel had come under heavy international pressure to release the funds.

The Finance Ministry said Monday the exact sum transferred would be determined in a meeting with Palestinian officials.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

JERUSALEM (AP) _ The military says Israel’s frontiers are quiet after a violent day of border breaches, though security forces remain on alert for more violence.

Police, meanwhile, say they arrested an unarmed man from Syria who tried to make his way out of the Golan Heights into Israel.

Police spokesman Micky Rosenfeld says the man was stopped in a taxi driven by a Palestinian from east Jerusalem at the exit of the Golan village of Majdal Shams.

Rosenfeld says police carried out house-to-house searches in Majdal Shams all night looking for some of the hundreds of people from Syria who burst through a border fence into the village Sunday.

Other Arab protesters marched on Israel’s borders with Lebanon and Gaza.

The protests sparked clashes that killed at least 15 people.

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Banks must endure financial fitness tests these days, with the results not always pretty or predictable.

This concept isn’t such a bad idea for average citizens either.

The darkest stories of recession involve lost jobs, lost homes and lost hope. It is not uncommon for others, those who avoid dire straits and experience some sense of relief, to overlook their financial responsibilities.

According to financial advisors, Americans too often are unaware of what they spend; most of their savings earn no interest; they pay too many bank fees; they carry too much credit card debt; they don’t invest for retirement; and they have no emergency fund set aside.

Remember: Just because you’re receiving a regular paycheck and no one’s knocking on the door to repossess your car, doesn’t mean that you and your family are financially fit.

“If you exercise a lot but eat horribly and are always stressed, you’re not going to be physically fit because a lot of things must work together,” said Kim McGrigg, manager of community relations for the Money Management International credit counseling agency in Denver. “The same goes for your finances, since you must examine savings balances, liabilities and future goals to see that everything is properly coordinated.”

Give yourself a test: Track your spending and income over a three-month period. Write down all money spent, including cash, using a small notepad or electronic device. Calculate your cash flow, listing all income sources in a basic budget. Don’t include anything as incoming until you are sure of it.

Record all expenses, and not simply obvious mortgage or car payments but also those you track through receipts and credit-account payments. Important additional expenses are food, transportation, medical costs and clothing.

Totaling your incoming and outgoing expenses produces a cash-flow statement. If you had an operating surplus of several thousand dollars, your net worth should have increased by at least as much. A negative income statement isn’t good. There should also be room for conscientious saving and investing.

“People treat ATMs like candy machines and keep going back again as the handful of money disappears,” observed Barbara Steinmetz, certified financial planner with Steinmetz Financial Planning in San Mateo, Calif. “I had one client with $15,000 worth of ATM withdrawals in one year and had no clue whatsoever what she had spent all that money on.”

You may think you are richer than you are.

“It’s not really helpful to make $100,000 a year when you find out that you spend $200,000, for what you make is the input and what you spend is the output,” warned Harold Evensky, CFP with Evensky & Katz in Coral Gables, Fla. “Start with liabilities, striving to minimize or eliminate consumer debt such as credit cards and car loans because they are very expensive, non-deductible forms of debt.”

There are “new kinds” of bills that consumers must cope with, such as for cellphones and cable television, McGrigg noted. Shop for the best deals and carefully go over the breakdown on your statements to see whether you need everything for which you’re being billed. If you receive a cable package in which you don’t watch most channels, weed out what you don’t want and trim that bill, she advised.

“I have clients who simply don’t open their mail every day, just thumb through to see if any envelopes look interesting or important,” said Steinmetz. “They may wait a week or more to open many of them, but you should open them right away because it is all about taking responsibility for your financial life.”

The most common financial mistake is spending beyond one’s means, and in second place is not saving to build up a nest egg, according to Evensky. Don’t focus on the total number of dollars needed at retirement when figuring how much you should save, but simply get started right away even if it is just $50 a month. If you save money now and save continuously, you will never have a chance to miss that money, he believes.

“An emergency fund is important, but remember that there is no magic answer,” said Evensky. “If you have a very secure job, maybe two to three months in emergency funds that could cover staying in your house and paying necessary bills is OK.”

Having adequate life, liability, house, auto and health insurance is also crucial, he said. Even though no one ever wants to think about it, such protection can make a big difference to your family.

Pay yourself before paying your bills, counseled McGrigg. The easiest way to build up an emergency fund, for example, is to deduct money every time you get paid and put it away before you have a chance to spend it. Most banks can do this automatically for you so that you never even get your hands on the money, she said.

“Another mistake is opening lots of new credit card accounts, especially store accounts just to save 10 to 15 percent on that first purchase,” McGrigg concluded. “Taking out credit on a whim or while standing in line is not a good idea, especially if you have larger financial goals.”

Because goals are what being financially fit is all about.

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U.K. producer prices rose more than economists forecast in April, suggesting inflation pressures may still be building in the economy.

The cost of goods at factory gates increased 0.8 percent from March, the Office for National Statistics said today in London. The median forecast of 12 economists in a Bloomberg News survey was for a 0.7 percent gain. From a year earlier, output prices rose 5.3 percent. Annual input-price inflation accelerated to the fastest since September 2008.

The Bank of England kept its benchmark interest rate at a record low of 0.5 percent yesterday, favoring support for the economy’s recovery over curbing an inflation rate that’s twice its 2 percent target. Nevertheless, with commodities such as crude oil surging, manufacturers may have no choice but to pass on higher costs to customers, feeding price pressures.

“There are underlying pressures for sure,” said David Tinsley, an economist at National Australia Bank in London. “Still, the recovery looks pretty limp and I don’t think there’s a lot of reason to be optimistic there’s going to be a recovery in domestic demand.”

The pound erased its decline against the dollar after the report and traded at $1.6384 as of 9:38 a.m. in London, little changed on the day.

Tax Increases

Tobacco and alcohol output prices jumped 2.6 percent in April from March, the statistics office said, while petroleum products rose 1.3 percent. The gains in tobacco and alcohol were largely due to an increase in taxes in the government’s budget in March.

Input prices rose 2.6 percent in April from March and were up 17.6 percent from a year earlier, the statistics office said. Crude oil was up 38 percent on the year, it said installment payday loans.

Core output prices, which exclude food, drink, tobacco and petroleum, increased 0.6 percent on the month and 3.4 percent on the year. The statistics office revised the monthly and annual increases in March headline output prices to 1.1 percent and 5.6 percent from 0.9 percent and 5.4 percent respectively.

Premier Foods Plc (PFD), the U.K.’s biggest food manufacturer, said on April 27 that first-half gross profit may suffer as it seeks to negotiate price increases to make up for rising costs.

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