California, Midwest, at high risk of electricity shortages: NERC

Wind turbines and power transmission lines at a wind farm near Highway 12 in Rio Vista, California, on Tuesday, March 30, 2021.

David Paul Morris | Bloomberg | Getty Images

America’s electrical grid is being pushed to the breaking point, and California, parts of the Midwest and parts of the South Central United States are at “high risk” for energy shortfalls, says the not-for-profit organization charged with managing and evaluating the grid.

“High risk” regions, marked in red on the map, may see shortfalls at “normal peak conditions,” according to the 54th annual assessment from the North American Electric Reliability Corporation released Thursday.

The reasons for the shortfalls vary.

In the Midwestern states and Ontario, more power generation is being retired than is being added back online, NERC’s Mark Olson told reporters Thursday. Projected energy shortfalls have been projected in that region since 2018, Olson said.

In California, the risk is due to a “variable resource mix” and “demand variability,” Olson said. That means there’s a lot of renewable energy in the state, and its generation is not coordinated with the times people need the most energy. NERC predicts that demand could fall below supply for 10 hours during peak summer months in 2024.

Much of the rest of the Midwest and the rest of the Western part of the United States are at “elevated risk” (yellow on the map), which means shortfalls may occur in extreme conditions, like during severe weather or hot spells where everyone is running air conditioners. In New England, the elevated risk comes in the winter when people use generators that depend on natural gas.

“The natural gas capacity can be insufficient for generators, leading to use of backup fuels, stored liquid fuels, and there are risks to being able to maintain sufficient fuel storage during long duration events,” Olson said.

The Southwest could also suffer when demand is high and wind energy generation is low in the region.

Why the U.S. power grid has become unreliable

‘Extraordinary times’

“We are living in extraordinary times from an electric industry perspective,” John Moura, the director of reliability assessment at NERC, said on Thursday.

Increasing awareness of climate change is pushing utilities to phase out fossil fuel-based sources of energy that generate carbon emissions. Renewables like wind and solar don’t contribute to climate change, but have period where they don’t generate any energy (when the sky is dark or the wind is still).

Renewables also don’t necessarily map to where demand is, unlike fossil fuels, which can be transported and burned near where they’re consumed. That means more transmission lines are needed, and building them can take from seven to 15 years, Moura says.

Another area of note, according to NERC, is the increased power demand of cryptocurrency mining and the need to plan for energy usage there.

Then there’s the weather. It’s tricky to tie particular extreme weather events to climate change, but it’s generally true that a warmer world is a wetter one, according to NASA climate scientists.

“Year after year, we’ve seen extreme weather leading to increased reliability impacts. And so when we look at events over the last several years, it’s clear that the bulk power system is impacted by extreme weather more than it ever has,” Moura told reporters on the media call.

These factors are placing increased strain on the grid, and NERC representatives urge grid operators to be conservative in their planning.

“Managing the pace of our generation retirement and our resource mix changes to ensure we have enough energy and essential services are an absolute necessity,” Moura told reporters on the call. “We need to work with the entire ecosystem to make sure we’re managing that base, and to be very clear that we’re not retiring generation prematurely — that is done in an orderly fashion and especially in areas that are right on the edge.”

For its annual long-term electricity security assessment, NERC looks at the coming decade, but energy and capacity risk assessment goes out for the coming five years, from 2023 to 2027. There are too many moving parts and uncertainties for a risk assessment past the next five years to be worthwhile, according to NERC.

The Federal Energy Regulatory Commission certified NERC to measure and enforce safety standards for the energy grid in the United States in 2006. NERC is subject to the oversight of FERC, which is the federal governmental agency in charge of regulating interstate electricity transmission.

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UK inflation falls from 41-year high as fuel price surge eases

LONDON — U.K. inflation came in slightly below expectations at 10.7% in November, as cooling fuel prices helped ease price pressures, though high food and energy prices continued to squeeze households and businesses.

Economists polled by Reuters had projected an annual increase in the consumer price index of 10.9% in November, after October saw an unexpected climb to a 41-year high of 11.1%. On a monthly basis, the November increase was 0.4%, down from 2% in October and below a consensus estimate of 0.6%.

The Office for National Statistics said the largest upward contributions came from “housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.”

The largest downward contributions over the month came from “transport, particularly motor fuels, with rising prices in restaurants, cafes and pubs making the largest, partially offsetting, upward contribution.”

The Bank of England will announce its next monetary policy move on Thursday. It is widely expected to raise interest rates by 50 basis points, as it juggles sky-high inflation and an economy that policymakers say is already in its longest recession on record.

The country faces widespread industrial action over the Christmas period, as workers strike to demand pay rises closer to the rate of inflation and better working conditions.

The independent Office for Budget Responsibility projected that the U.K. will suffer its largest fall in living standards since records began, as real household income is expected to decline by 4.3% in 2022-23.

U.K. Finance Minister Jeremy Hunt last month announced a sweeping £55 billion ($68 billion) fiscal plan, including a slew of tax rises and spending cuts, in an attempt to plug a substantial hole in the country’s public finances.

A positive step, but risks remain

While the dip in Wednesday’s figures is a step in the right direction, the persistent problem of rising food prices and household energy bills remains a thorn in the side of the British economy, noted Richard Carter, head of fixed interest research at Quilter Cheviot.

However, Carter suggested inflation may finally be passing its peak, after the U.S. also posted a better-than-expected CPI print on Tuesday.

“Temperatures have taken a sharp dive in the last week or so, and the demand for gas will no doubt have increased as people are forced to heat their homes,” Carter added.

“As the autumn had been rather mild, we will only now begin to see the real impact of higher energy bills. While the government support remains in place for now, any changes made once the April deadline is reached could have a knock-on effect on inflation.”

The Bank of England faces a tricky task in trying to drag inflation back towards its 2% target while remaining cognizant of a weakening economy. This was evident in the latest U.K. labor market data earlier this week, which showed an uptick in both unemployment and wage growth.

“While inflation is falling, it remains well ahead of wages, and we are heading into a new winter of discontent with strikes concentrated in the unionised public sector and former nationalised industries as a result,” Carter said.

The market is pricing a 50 basis point interest rate hike from the Bank on Thursday, taking the benchmark rate to 3.5%. Policymakers have signaled a potential slowing of the pace of hikes in 2023. However, inflation remains well above target.

“The Chancellor’s Autumn Statement in November helped to settle the waters following months of significant turbulence, but inflation remains far above the Bank’s 2% target, which means there is still a long way to go yet,” Carter said.

“A rapid fall in inflation is highly unlikely, but it is positive to see it finally moving in the right direction.”

This is a breaking news story, please check back later for more.

Consumer inflation expected to have continued cooling in November but still high

A person walks past the meal aisle inside a grocery store on November 14, 2022 in New York City.

Spencer Platt | Getty Images

Consumer inflation likely cooled in November, but prices continued to rise at a still high rate, particularly for services.

Economists expect the consumer price index rose by 0.3% in November, or at an annual pace of 7.3%, according to Dow Jones. That’s down from 7.7% in October. When excluding food and energy, core CPI was expected to climb by 0.3%, or 6.1% year-over-year, compared with October’s 0.3% gain, or an annual rate of 6.3%, according to Dow Jones.

The inflation report is expected at 8:30 a.m. ET Tuesday, as the Federal Reserve begins its two-day meeting. The central bank is widely expected to raise rates by a half percentage point Wednesday afternoon, and economists mostly expect the Fed to stick with the 50 basis point increase even if the CPI report is hotter. A basis point equals 0.01 of a percentage point.

“I think if the market sees something in line, all is good,” said Mark Cabana, head of U.S. rate strategy at Bank of America Merrill Lynch. “If the theme holds, rates [bond yields] probably still decline a bit. But if we see something that surprises to the upside, I think that would generate a more sizeable market response because it would be questioning the theme the market has really latched on to — which is that inflation has peaked.”

Economists expect the Fed will keep raising interest rates until the fed funds target rate edges to 5% or slightly more. The fed funds target range is currently 3.75% to 4%. A hotter or lower CPI report is not likely to sway the Fed for this meeting, but economists say it could be a signal about the longer-term trajectory for interest rates.

Stocks were higher Monday, and Treasury yields were also higher ahead of Tuesday’s CPI report. Bond yields move opposite price. The 2-year note yield, which most reflects Fed policy, jumped to 4.39% Monday, up 0.06 of a percentage point.

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Fed Chairman Jerome Powell holds his regular post meeting press conference Wednesday at 2:30 p.m. ET, a half hour after the Fed releases its policy statement and its latest economic and interest rate forecasts.

“I think it will be another benign print. I’m pretty neutral on this report,” said Aneta Markowska, chief financial economist at Jefferies. “It feels like that risks are asymmetrically skewed toward the high side. I think if you get a higher print, I think the [stock] sell-off is disproportionately stronger.”

Markets will be largely focused on inflation coming from services, excluding real estate, since Powell highlighted that recently.

“Powell pretty much told us last week that we know core goods will continue to slow. We know housing will eventually slow as the decline in market rents eventually comes through. The one piece we don’t have confidence in slowing is core services ex-housing,” said Markowska.

The Jefferies economist said that component of the inflation report is key, since it includes the areas that are driven by wage inflation, like transportation, medical services, education and recreation. She said core goods inflation should slow, and some price inflation in services will show signs of abating. Hotel rates are one area where inflation could slow, and economists expect pandemic-related price jumps should continue to unwind, including in used automobiles.

Why everyone is so obsessed with inflation

“We know it’s going to be better inflation data. It’s going to be cooler. That’s great, but it’s going to be about getting down into a lot of details to see where there is inflation and where there isn’t,” said Diane Swonk, chief economist at KPMG. Swonk said the data is unlikely to be reflected in the Fed’s quarterly forecasts, expected Wednesday afternoon. But a hotter or weaker number could still influence other communications from the Fed.

“They will have already pulled it apart by the time they meet. They will be discussing it,” said Swonk. “It could shade the tenor, the nuance with which Powell delivers his press conference.”

Swonk said the data could continue to be noisy and inconclusive about where inflation is going.

“Unfortunately, it will be less definitive than we would like because we know there are some distortions in it,” she said. “The more important issue is whether there is something happening in that non-shelter service component that is more systemic than what the Fed is looking at.”

Swonk said it will important to see whether there is a significant downward movement or inflation is plateauing, which would also be positive compared to rising prices.

“We’re going to look at the things that are most dependent on wages,” she said. “It means looking at everything from restaurant costs, hospitality to hotel rooms, hair cuts and personal care.”

Areas where there was the most inflation, like energy, should continue to cool off. Energy was up 1.8% in October.

401(k) hardship withdrawals hit all-time high, Vanguard says

Thomas Barwick | Stone | Getty Images

The share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group.

That dynamic — when coupled with other factors like fast-rising credit card balances and a declining personal savings rate — suggests households are having a tougher time making ends meet amid persistently high inflation and need ready cash, according to financial experts.

Nearly 0.5% of workers participating in a 401(k) plan took a new “hardship distribution” in October, according to Vanguard, which tracks 5 million savers. That’s the largest share since Vanguard began tracking the data in 2004.

Put another way, roughly 25,000 workers took one of these distributions, which allow workers to tap their 401(k) plans before retirement for an “immediate and heavy” financial need.

Meanwhile, savers have been dipping into their nest eggs via other means — loans and “nonhardship” distributions — in higher numbers throughout 2022, according to Vanguard data.

We're not on the edge of a recession, says JPMorgan's chief U.S. economist Mike Feroli

“We are starting to see signs of financial distress at the household level,” said Fiona Greig, global head of investor research and policy at Vanguard.

That said, the overall monthly share of people taking a hardship withdrawal is relatively small and not indicative of the “typical” 401(k) saver, she added.

Americans are ‘feeling the pinch from inflation’

Nearly all 401(k) plans allow workers to take hardship withdrawals, but employers may vary in their rationale for allowing them.

More than half of plans let workers tap funds to “alleviate major financial pressures,” according to the Plan Sponsor Council of America, a trade group. But they more frequently allow withdrawals to cover medical expenses, housing (to buy a primary residence, or prevent eviction or foreclosure), funeral costs or loss due to natural disasters, for example.

Participants can also access 401(k) savings via loans or nonhardship withdrawals. The latter are for workers over age 59½, and sometimes for workers in other circumstances not related to financial hardship (for instance, rolling over assets to an individual retirement account while working).

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Nonhardship distributions also hit an all-time high in October — almost 0.9% of participants took one that month, according to Vanguard. And the share of workers taking 401(k) loans rose to 0.9% in October from 0.8% at the beginning of 2022.

Overall, it’s a sign that more households need liquidity.

“People are feeling the pinch from inflation,” said Philip Chao, principal and chief investment officer at Experiential Wealth in Cabin John, Maryland.

Savers aren’t always prudent in their financial decision-making, and many times think of a 401(k) “more like a piggy bank,” he said.

The inflation rate has declined in recent months from its pandemic-era peak this summer but is still hovering near its highest level since the early 1980s. The prices consumers pay for a broad swath of goods and services — like groceries and rent — are still rising quickly. Wage growth hasn’t kept pace for the average person.

Meanwhile, federal pandemic-era financial supports have dwindled. A student loan payment pause — among the last vestiges of support — could end sometime next year. Many households have spent down at least some savings amassed from stimulus checks and enhanced unemployment benefits. The 2.3% personal savings rate in October was a pandemic-era low. Household debt soared at its fastest rate in 15 years in the third quarter. Debt delinquency in Q3 increased for nearly all types of household debt, though remains low by historical standards, according to the Federal Reserve Bank of New York.

In 2020, Congress authorized Covid-related withdrawals of up to $100,000 from 401(k) plans as part of the CARES Act. About 1% of participants took such withdrawals each month in 2020, and other types of withdrawals slightly declined during that time.

Why raiding retirement savings is a ‘terrible idea’

“It’s a terrible idea to take money out of your 401(k),” said Ted Jenkin, a certified financial planner and co-founder of oXYGen Financial, based in Atlanta.

The recent uptick in hardship distributions is especially concerning, financial advisors said. Beyond the apparent acute financial need among households, hardship withdrawals carry negative repercussions.

For instance, workers under age 59½ typically owe a 10% tax penalty on their withdrawal, in addition to income tax on pretax savings. This is true for nonhardship withdrawals and loans that aren’t repaid, too.

But, unlike a 401(k) loan, savers can’t pay themselves back when they take a hardship distribution — meaning the savings and its future investment earnings is permanently lost, unless workers can somehow make up for it later with higher savings rates. And many employers disallow workers from contributing to their 401(k) for six months after taking a hardship distribution.

Why Americans are finding it more difficult to retire

We are starting to see signs of financial distress at the household level.

Fiona Greig

global head of investor research and policy at Vanguard Group

Selling investments in a taxable investment account may also be a better option than raiding a retirement account or taking on debt, Greig said. While the stock market is down this year, investors may still be in the black when looking over the past two to three years, she said. They’d owe capital gains tax if they sell winning investments, though; even if they sell those investments for a loss, they can use those losses to derive a tax benefit via tax-loss harvesting.

Consumers should also examine the root cause of their financial need, especially if it isn’t due to a one-time, unexpected need, Jenkin said.

“Taking a hardship withdrawal is an effect,” said Jenkin. “It’s the end product of needing money today.

“Like a business, you have to ask yourself, do I have an income problem, an expense problem, or both?”

Big discounts equals high pressure for retailers

Black Friday sign in retail store in Walnut Creek, California.

Smith Collection/gado | Archive Photos | Getty Images

Major retailers are under intense pressure to deliver on Black Friday after several of them reported a slowdown in sales heading into the do-or-die holiday shopping season.

Macy’s, Target, Kohl’s, Gap and Nordstrom spoke about a lull in sales in late October and early November. Target cut its holiday-quarter outlook and Kohl’s pulled its forecast, citing the slow sales. Macy’s CEO Jeff Gennette said shoppers kept visiting its stores and website during that lull, but the browsing did not turn into buying. Best Buy CEO Corie Barry said shoppers are showing more interest in sales than usual.

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Those results illustrate an emerging theme of this season: Shoppers are holding out for the biggest and best deals — especially as inflation hits their wallets.

“People are willing to wait and be patient,” said Rob Garf, vice president and general manager of retail for Salesforce, a software company that also tracks shopping trends. “The game of discount chicken is back and consumers will ultimately win.”

That big appetite for deals is fueling higher expectations for a bigger Black Friday weekend. Many major retailers, including Walmart and Target, will remain shuttered on Thanksgiving. Yet a record number of people — 166.3 million — are expected to shop during the weekend, which stretches from Thursday through Cyber Monday, according to an annual survey by the National Retail Federation and Prosper Insights & Analytics.

That is up by nearly 8 million people than a year ago and the highest estimate since NRF began tracking the data in 2017.

Consumers are being more selective with how they are spending

Retailers and industry watchers have been anticipating a more muted holiday season with sales driven more by higher prices than a huge appetite for goods. The National Retail Federation is predicting a 6% to 8% increase in sales, including the boost from nearly record-high levels of inflation.

Travel and experiences are competing more fiercely for Americans’ wallets, too, as Covid-19 concerns fade.

Retail executives that have reported earnings have spoken of a shift back to the pre-pandemic style of gift purchasing. In the past two years, consumers shopped earlier and spread out gift-buying because of worries of shipping delays and out-of-stocks caused by a spike in online sales and congested ports.

This year, retailers once again started their sales early — but geared them toward selling excess inventory and catering to a more value-oriented consumer. Amazon threw a second Prime Day-like sale in October, and Target and Walmart had competing sales around the same time.

Shopping strategically

Not only do you have dollars shifting to travel and entertainment, you also have dollars shifting to needs.

Chris Horvers

JPMorgan analyst

Other factors may have dampened demand in late October and November, too. On recent earnings calls, Gap and Nordstrom executives referred to unseasonably warm weather in the fall, which may have inspired consumers to hold off from dashing to stores to buy winter coats or heavy sweaters.

Plus, some Americans were tuning in to the midterm elections — highly contested races that caught their attention and may have contributed to economic uncertainty, too, said Chris Horvers, an equity research analyst who covers retail for JPMorgan.

But, he added, a weaker start to the holidays has also set off some alarms about the health of the consumer. Retailers have been cautious when sharing hopes for the season — and they have alluded to consumers who are dipping into savings accounts and running up credit card balances, despite putting up stronger-than-feared results for the third quarter.

“Not only do you have dollars shifting to travel and entertainment,” Horvers said, “you also have dollars shifting to needs.”

Plus, he said, it’s not all good news if people show up for Black Friday weekend.

“If the consumer is responsive to promotions this week and shops but then stops spending shortly thereafter, it’s going to reinforce this concern retailers already have that the consumer is only shopping in need and only is going to shop when there’s a discount.”

China property stocks surged amid warnings of weak reality, high expectations

China’s housing prices fell in October due primarily to falling prices in less developed, so-called Tier-3 cities, according to Goldman Sachs analysis of official data.

Future Publishing | Future Publishing | Getty Images

BEIJING — China’s real estate sector isn’t yet poised for a quick recovery, despite a rally this month in stocks of major property developers.

That’s because recent support by Beijing don’t directly resolve the main problem of falling home sales and prices, analysts say.

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Last week, property developer stocks surged after news the central bank and banking regulator issued measures that encouraged banks to help the real estate industry. It comes alongside other support measures earlier this month.

Shares of Country Garden, the biggest Chinese developer by sales, have more than doubled in November, and those of Longfor have surged by about 90%. The stocks have already given back some of this month’s gains.

Meanwhile, iron ore futures surged by about 16% this month — Morgan Stanley analysts say about 40% of China’s steel consumption is used in property construction.

The situation is one of “strong expectations, but weak reality,” and market prices have deviated from the fundamentals, Sheng Mingxing, ferrous metals analyst at Nanhua Research Institute, said in Chinese translated by CNBC.

Sheng said it’s important to watch whether apartments can be completed and delivered during the peak construction period of March and April.

This really is a temporary relief in terms of the developers having to meet less debt repayment needs in the near future…

The new measures, widely reported in China but not officially released, stipulate loan extensions, call for treating developers the same whether they are state-owned or not and support bond issuance. Neither regulator responded to CNBC’s request for comment.

“This really is a temporary relief in terms of the developers having to meet less debt repayment needs in the near future — a temporary liquidity relief rather than a fundamental turnaround,” Hong Kong-based analyst Samuel Hui, director, Asia-Pacific corporates, Fitch Ratings, said Wednesday.

“The key is that we still need the fundamental underlying home sales market to improve,” he said, noting homebuyer confidence relies on whether developers can finish building and delivering apartments.

Earlier this year, many homebuyers refused to continue paying mortgages on apartments when construction was delayed. Homes in China are typically sold ahead of completion, generating a major source of cash flow for developers.

A drawn-out recovery

Analysts differ on when China’s property market can recover.

Fitch said a timeline “remains highly uncertain,” while S&P Global Ratings’ Senior Director Lawrence Lu expects a recovery could occur in the second half of next year.

“If this policy is implemented promptly, this will stop the downward spiral to the developers, this will help to restore the investors’ confidence [in] the developers,” he said.

Residential housing sales for the first 10 months of the year dropped by 28.2% from a year ago, the National Bureau of Statistics said last week. S&P Global Ratings said in July it expects a 30% plunge in sales for 2022, worse than in 2008 when sales fell by about 20%.

A slowdown in economic growth, uncertainty about ongoing Covid controls and worries about future income have dampened appetite for buying homes.

Much burden is on China despite its rules-based system: World Bank

Adding to those worries are falling prices.

Housing prices across 70 cities fell by 1.4% in October from a year ago, according to Goldman Sachs analysis of data released Wednesday.

“Despite more local housing easing measures in recent months,” the analysts said, “we believe the property markets in lower-tier cities still face strong headwinds from weaker growth fundamentals than large cities, including net population outflows and potential oversupply problems.”

The report said housing prices in the largest, tier-1 cities rose by 3.1% in October from September, while Tier-3 cities saw a 3.9% drop during that time.

About two years ago, Beijing began to crack down on developers’ high reliance on debt for growth. The country’s most indebted developer, Evergrande, defaulted late last year in a high-profile debt crisis that rattled investor confidence.

Worries about other real estate companies’ ability to repay their debt have since spread to once-healthy developers.

Trading in shares of Evergrande, Kaisa and Shimao is still suspended.

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While Covid controls have dragged down China’s growth this year, the real estate market’s struggles have also contributed significantly.

The property sector, including related industries, accounts for about a quarter of China’s GDP, according to analyst estimates.

“I think the real estate sector will become lesser of a drag to the economy in 2023,” Tommy Wu, senior China economist at Commerzbank AG, said Wednesday.

“It is too early to tell whether the measures rolled out so far will be enough to rescue the real estate sector,” he said. “But it feels more assuring now because it seems more likely that more forceful measures will be rolled out if the real estate downturn still doesn’t turn around meaningful in the coming months.”

A longer-term transformation

Ultimately, China’s real estate industry is undergoing a state-directed transformation — to a smaller part of the economy and a business model far less reliant on selling apartments before they’re completed.

The property market has shrunk by roughly one-third compared to last year, and will likely remain the same size next year, S&P’s Lu said.

State-owned developers have fared better during the downturn, he pointed out.

In the first three quarters of the year, Lu said sales by state-owned developers fell by 25%, compared to the 58% sales decline for developers not owned by the state.

And despite recent policy moves, Beijing’s stance remains firm in dissuading home purchases at scale.

Whether it’s messaging from the National Bureau of Statistics or the People’s Bank of China, official announcements this month reiterated that houses are for living in, not speculation — the mantra that marked the early beginnings of the real estate market slump.

UK inflation hits 41-year high of 11.1% as food and energy prices continue to soar

U.K. inflation hit a 41-year high of 11.1% annually in October, as household energy bills and food prices continued to soar.

Dan Kitwood | Getty Images News | Getty Images

LONDON — U.K. inflation jumped to a 41-year high of 11.1% in October, exceeding expectations as food, transport and energy prices continued to squeeze households and businesses.

Economists polled by Reuters had projected an annual increase in the consumer price index of 10.7%, and October’s print marks an increase from the 40-year high of 10.1% seen in September.

Despite the introduction of the government’s Energy Price Guarantee scheme, the Office for National Statistics said the largest upward contributions came from electricity, gas and other fuels.

“Indicative modelled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%,” the ONS said.

On a monthly basis, the CPI rose 2% in October, matching the annual CPI inflation rate between July 2020 and 2021.

Overall, the cost of housing and household services, which includes energy bills, rose by an all-time high of 11.7% in the 12 months to October 2022, up from 9.3% in September 2022.

“In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago,” the ONS said.

“Domestic gas prices have seen the largest increase, with prices in October 2022 being more than double the price a year earlier.”

Food and non-alcoholic beverages also contributed heavily, rising by 16.4% in the 12 months to October to notch its highest annual rate since September 1977.

The country faces its longest recession on record, according to the Bank of England, while the government and central bank are attempting to coordinate the tightening of fiscal and monetary policy in order to rein in inflation.

The Bank raised interest rates by 75 basis points earlier this month, its largest hike in 33 years, to take the Bank Rate to 3%, but challenged the market’s pricing of future rate increases.

Finance Minister Jeremy Hunt will deliver a new fiscal statement on Thursday and is expected to announce substantial tax hikes and spending cuts in a bid to plug a £50 billion-plus hole in the country’s public finances.

This is a breaking news story, please check back later for more.

Joe Biden threatens higher taxes on oil companies amid high gas prices

President Biden says oil company profits 'outrageous' and a 'windfall of war'

President Joe Biden threatened Monday to pursue higher taxes on oil company profits if industry giants do not work to cut gas prices.

Biden has criticized oil companies that have made record-high profits as consumers struggle to keep up with high gas prices. The price of a gallon of gas was $3.76 on Monday, according to AAA, down from a record of over $5 in June but still higher than a year ago.

“Their profits are a windfall of war,” Biden said, referring to Russia’s war in Ukraine, which prompted Western sanctions that reduced oil supply. “It’s time for these companies to stop their war profiteering.”

“If they don’t they’re going to pay a higher tax on their excess profits,” he said.

With eight days to go before Election Day, White House messaging has focused on how Democrats are working to improve the economy and how Republicans would make it worse. Inflation and the economy consistently rank as the top issue for voters — and higher gas prices stretched consumer budgets for much of this year.

U.S. President Joe Biden makes a statement about gasoline prices and oil company profits in the Roosevelt Room at the White House in Washington, October 31, 2022.

Leah Millis | Reuters

Ahead of the election, he has highlighted efforts to reduce consumer costs in a range of other industries. Last week, Biden announced initiatives to address “junk fees” from banks, airlines, cable companies and other industries, aiming to “provide families with more breathing room.”

Any new taxes on oil profits would need congressional approval, which may prove difficult as Democrats control both chambers of Congress by slim margins. Progressives like Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts previously floated the idea.

Republicans, who generally support lower taxes, also hope to win back one or both chambers of Congress in the Nov. 8 midterms.

Biden stressed that he is “a capitalist” but added that companies are making “profits so high it’s hard to believe.”

Shell made $9.5 billion in profits in the third quarter, almost double what it made in the same period last year, Biden said. Exxon’s profits in the third quarter were $18.7 billion, nearly triple what Exxon made last year and the most in its 152-year history.

Biden has made pleas to oil companies to increase production rather than to enrich shareholders in recent weeks as the price of gas remains high.

Earlier this month, Biden announced the release of 15 million barrels of crude oil from the Strategic Petroleum Reserve. The White House has released about 165 million barrels of crude from the reserve since the beginning of the year, out of a total that it said would be around 180 million. 

Biden promised in his earlier speech to purchase oil to refill the reserve once the price hits $70 a barrel. He said companies should therefore invest now in increased production with the confidence that the government will purchase the oil later.

The American Petroleum Institute, an oil and natural gas trade association, did not immediately respond to a request to comment on Biden’s remarks.

High court Justice Alito assured Kennedy on abortion rights: NY Times

Senator Ted Kennedy (D-MA) boards an elevator after walking off the floor of the U.S. Senate after a roll call vote to achieve cloture on the nomination of Judge Samuel Alito to the US Supreme Court passed 72 to 25 January 30, 2006 in Washington, DC.

Chip Somodevilla | Getty Images

Supreme Court Justice Samuel Alito, who wrote the majority opinion this summer overturning the abortion rights case Roe v. Wade, assured the late Sen. Ted Kennedy in 2005 that he considered a key legal basis for Roe to be “settled,” a new report reveals.

“I am a believer in precedents,” the conservative Alito told Kennedy, the liberal Massachusetts Democratic senator wrote in his diary in November 2005, The New York Times reported.

“I believe that there is a right to privacy. I think it’s settled as part of the liberty clause of the 14th Amendment and the Fifth Amendment,” Alito said, according to the diary citation.

“So I recognize there is a right to privacy. I’m a believer in precedents. I think on the Roe case that’s about as far as I can go,” Alito said to Kennedy, a staunch defender of abortion rights who died in 2009.

The comment was made as Alito was seeking Senate confirmation to the court during a visit to Kennedy’s office, wrote John Farrell in the Times report. Farrell’s new book, “Ted Kennedy: A Life,” which features details of the diary entries, is being published Tuesday.

Protesters amass outside the Supreme Court after leaked doc suggests justices to overturn Roe v. Wade

The 1973 decision in Roe established for the first time that there was a federal constitutional right to abortion.

Roe was based on a prior high court decision, Griswold v. Connecticut, which in 1965 found that there was a constitutional right to marital privacy, in a case related to married couples having been barred from using birth control.

Conservatives for decades attacked Roe as flawed, in part with the argument that the Constitution does not explicitly state individuals have a right to privacy, much less one to abortion.

Associate Justice Samuel Alito poses during a group photo of the Justices at the Supreme Court in Washington, April 23, 2021.

Erin Schaff | Pool | Reuters

During his meeting with Alito, Kennedy was skeptical of the judge, who as a lawyer in the Justice Department during the Reagan administration had written a memo in 1985 that noted he opposed Roe.

“Judge Alito assured Mr. Kennedy that he should not put much stock in the memo,” the Times reported.

“He had been seeking a promotion and wrote what he thought his bosses wanted to hear. ‘I was a younger person,’ Judge Alito said. ‘I’ve matured a lot.’ “

Alito also said that his views on Roe being erroneously decided were “personal,” according to Kennedy’s diary.

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“Those are personal,” Alito said, Kennedy wrote in the diary. “But I’ve got constitutional responsibilities and those are going to be the determining views.”

Despite that assurance, Kennedy voted against confirming Alito to the Supreme Court.

Alito didn’t return a request submitted to the Supreme Court’s press office seeking comment on the Times article.

In July, Alito wrote the majority decision in the case Dobbs v. Jackson Women’s Health Organization, which overturned both Roe and another landmark abortion rights case, Planned Parenthood v. Casey, which was decided in 1992.

“Roe was egregiously wrong from the start,” Alito wrote.

“Its reasoning was exceptionally weak, and the decision has had damaging consequences. And far from bringing about a national settlement of the abortion issue, Roe and Casey have enflamed debate and deepened division,” he wrote, noting that those cases “must be overruled.”

“The Constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision, including the one on which the defenders of Roe and Casey now chiefly rely — the Due Process Clause of the Fourteenth Amendment,” he wrote.

It was that amendment, the 14th, which Alito reportedly had told Kennedy almost 17 years earlier established a right to privacy.

But Alito’s opinion in Dobbs said that abortion is a “fundamentally different” right than ones such as “intimate sexual relations, contraception, and marriage,” because “it destroys … ‘fetal life.'”

The Dobbs ruling meant that individual states would again have the authority to strictly limit or even ban abortion, or to allow it with loose restrictions.

Abortion has been largely banned in at least 13 states since Dobbs was issued.

In a concurring opinion with Dobbs, Alito’s fellow conservative, Justice Clarence Thomas, wrote that other landmark rulings by the court that established gay rights and the right to contraception should be reconsidered now that Roe had been tossed out.

Thomas said in his opinion that those rulings “were demonstrably erroneous decisions.”

The cases he mentioned are Griswold v. Connecticut; Lawrence v. Texas, which in 2003 established the right to engage in private sexual acts; and the 2015 ruling in Obergefell v. Hodges, which said there is a right to same-sex marriage.

Thomas noted that all those decisions are based on interpretations of the due process clause of the 14th Amendment.

He wrote that the constitutional clause guarantees only “process” for depriving a person of life, liberty or property cannot be used “to define the substance of those rights.”

WWE stock hits 52-week high in Vince McMahon scandal aftermath

Vince McMahon attends a press conference to announce that WWE Wrestlemania 29 will be held at MetLife Stadium in 2013 at MetLife Stadium on February 16, 2012 in East Rutherford, New Jersey.

Michael N. Todaro | Getty Images

World Wrestling Entertainment is defying broader market trends this year.

The company’s stock is up more than 50% in 2022, hitting a 52-week high Monday, and trading at levels it hasn’t seen since summer 2019. The S&P 500, by comparison, is down more than 20% this year.

The stock’s strong performance this year occurred WWE’s live wrestling-events business came roaring back after months of Covid restrictions and the company increasingly became the subject of sale talks. The stock continued to do well after the company’s longtime leader and biggest shareholder, Vince McMahon, retired from the company over the summer in a cloud of scandal.

Shares of the company were effectively flat Monday after hitting $76.90. WWE’s market capitalization is over $5.6 billion.

Industry insiders believe WWE could be an acquisition target. A deal could come before the company’s next U.S. TV rights renewal — likely to be announced in mid-2023. WWE’s current U.S. streaming deal with NBCUniversal’s Peacock expires in 2026.

WWE has also had to deal with McMahon’s controversies. He retired in July after it was revealed that he had paid nearly $20 million in previously unrecorded expenses.

Of those payments, almost $15 million went to settle sexual misconduct allegations from four women against McMahon over the last 16 years, and $5 million went to Donald Trump’s foundation from donations made in 2007 and 2009.

WWE has hinted that the hush payments to alleged victims, already the subject of an ongoing independent review overseen by the company’s board, are under investigation by other entities.

Still, WWE stayed in the family. Stephanie McMahon, McMahon’s daughter, took over as chairwoman and co-CEO alongside Nick Khan, who also serves as the company’s president. Stephanie’s husband and longtime wrestler Paul “Triple H” Levesque has taken over as the company’s top creative executive, the role the elder McMahon had before he retired.

Vince McMahon, 77, remains the largest stakeholder in the company, holding about 32% of shares.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

–CNBC’s Chris Hayes contributed to this report.