Business briefing

The daily business briefing: July 14, 2022

Inflation jumps to 9.1 percent in June, the euro falls below parity with the dollar, and more

1

Inflation jumped to 9.1 percent in June

The U.S. consumer-price index jumped a more-than-expected 9.1 percent in June, marking an acceleration from the 8.6 percent inflation rate in May, the Labor Department reported Wednesday. The June pace was the fastest since November 1981. Surging prices for gasoline, which increased 11.2 percent from the previous month, helped drive the increase, as did rising rents and food prices. Core prices, which exclude volatile fuel and food prices, jumped by 5.9 percent last month compared to a year earlier, just behind May's 6.0-percent increase. The hot inflation reading supported expectations that the Federal Reserve will make another rare three-quarter percent interest rate increase at its July meeting as it tries to cool the economy and bring down inflation.

2

Euro falls below 1-to-1 exchange rate with U.S. dollar

The euro briefly fell below parity with the U.S. dollar for the first time since December 2002 on Wednesday, as Russia's invasion in Ukraine, uncertain Russian energy supplies, and rising recession risk increase pressure on Europe's common currency. The last time the euro was at or near a one-to-one exchange rate with the dollar was in the early years of its existence. So far this year, its value has fallen more than 11 percent against the dollar, which has gained against most currencies. In foreign-exchange markets, "1.00 is probably the biggest psychological level around," analysts at the Dutch bank ING said in a note to clients. The euro is shared by 19 European countries.

3

Starbucks to close 16 stores, citing safety concerns

Starbucks plans to shut down 16 locations across the country due to worker safety concerns. The targeted outlets "have experienced a high volume of challenging incidents that make it unsafe to continue to operate," CNN reported. In a letter to employees, senior vice presidents of U.S. operations Debbie Stroud and Denise Nelson said the workers are "seeing firsthand the challenges facing our communities – personal safety, racism, lack of access to healthcare, a growing mental health crisis, rising drug use, and more." The letter says "creating a safe, welcoming, and kind third place" is a "top priority." The stores, which are scheduled to close by the end of July, are located in Seattle, Los Angeles, Philadelphia, Washington, D.C., and Portland.

4

Netflix partners with Microsoft on ad-supported streaming plan

Netflix has chosen Microsoft as its sales and technology partner to launch a low-cost video streaming plan supported by advertising, the companies announced Wednesday. Netflix said in April it was exploring the possibility of offering an ad-supported plan as it worked on boosting subscription growth, which soared early in the coronavirus pandemic but has since come down. The company posted its first subscriber loss in more than a decade in the first quarter of 2022. Enlisting help from a technology partner was key to getting the project launched quickly. "Microsoft has the proven ability to support all our advertising needs," Netflix Chief Operating Officer Greg Peters said in a statement.

5

Stock futures fall after inflation report

U.S. stock futures dropped sharply early Thursday after the Labor Department reported that consumer prices jumped 9.1 percent on the year in June, a hotter reading than expected. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 1.0 percent and 1.1 percent at 6:30 a.m. ET, as investors awaited bank earnings. Nasdaq futures were down 0.9 percent. The three main U.S. averages slipped on Wednesday after the inflation data was released. The Dow ended the day down 0.7 percent. The S&P 500 and the tech-heavy Nasdaq fell 0.2 percent and 0.5 percent, respectively, as the June inflation data boosted expectations that the Federal Reserve would continue aggressively raising interest rates to lower inflation when it meets later in July.

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