Good evening

Global food prices have struck a new high, rising at the fastest monthly rate in 14 years as war in Ukraine hit the supply of grains and vegetable oils, in a shift likely to do the greatest harm in the world’s poorer countries.

March’s food price index from the UN Food and Agricultural Organization rose to its third record high in a row, jumping by 34 per cent from the same time last year, after the war shut down supply lines from Ukraine and Russia. The index was 12.6 per cent higher than in February, a rise that the organisation described as a “giant leap”, according to analysis by FT reporters Emiko Terazono and Robert Wright.

Many poorer countries are already struggling from the impact of Covid-19, and several in the Middle East and north Africa rely on both Ukraine and Russia for their grain and vegetable oils.

The World Bank has warned that higher food prices could cause lasting damage to low and middle-income countries and could contribute to pushing millions of people into poverty.

As concerns over escalating food costs mount, western countries continued to scrabble together policies this week aimed at weaning themselves off their energy dependence on Russia amid wider diplomatic and practical pressure to isolate Moscow and aid Ukraine’s war effort.

Josep Borrell, the EU’s top diplomat, said on Thursday that it is now more a question of when, rather than if, the EU imposes a blockade on Russian oil, reported Sam Fleming in Brussels for our Europe Express newsletter.

The topic would be discussed at Monday’s EU foreign affairs council meeting, Borrell said, adding: “Sooner or later — I hope sooner — it will happen.”

However, the situation was confused later on Friday when a senior EU official contradicted this view and stated a formal proposal for an oil embargo would not be discussed on Monday, suggesting that it was due to divisions between EU member states.

Meanwhile, in the UK, prime minister Boris Johnson unveiled a long-awaited energy policy review on Wednesday night that set out a pathway to curbing Britain’s dependence on fossil fuels, made worse by the conflict in Ukraine.

The review puts an expansion in offshore wind and nuclear power at the centre of a policy that aims to produce 95 per cent of electricity from low-carbon sources by 2030 and reduce the UK’s dependence on gas and oil.

UK industry groups and academics branded the review as a “missed opportunity” that failed to reduce the country’s reliance on expensive imports in the short term or tackle the financial strain on households created by soaring fuel bills.

On Friday, Japan announced it would be joining EU and G7 allies to target Russia’s energy sector for the first time following Moscow’s invasion of Ukraine, report Antoni Slodkowski and Song Jung-a.

“I am banning imports of Russian coal. By gradually reducing the imports we will lower our energy dependence on Russia,” prime minister Fumio Kishida said, adding that Japan would focus on renewables and nuclear power to replace lost supplies.

But enacting substantive measures to end dependence on Russian oil and gas in Europe and beyond will come at a cost, writes Tom Wilson.

His analysis published yesterday shows how difficult it would be to remove Russian gas from the European energy mix without imposing stringent curbs on industrial consumption that would threaten economic growth.

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Need to know: the economy

Latest for the UK/Europe

Russia’s central bank cut interest rates today in a bid to cushion the economy from the impact of western sanctions, saying the recent rebound in the rouble had eased inflationary pressures, writes Tommy Stubbington.

The Bank of Russia said it would lower its key interest rate to 17 per cent from its previous high of 20 per cent. It had more than doubled borrowing costs in late February in an effort to prop up its currency.

Germany’s government has announced an aid package to support companies hit by the fallout of the Ukraine war and the sanctions against Russia, writes Martin Arnold.

The measures include a new €100bn programme of loans for energy companies struggling to finance the “margin calls” required to cover the extra cost of insuring themselves against higher energy prices.

Nearly half of UK businesses expect the Russian invasion of Ukraine to result in lower sales and a growing proportion say rising energy and input prices are prompting them to curb their investment plans, according to official data published on Thursday.

Global latest

A spate of lockdowns in Shanghai and other Chinese cities is piling severe pressure on transport and logistics across the country, exacerbating the economic fallout of the government’s commitment to its zero-Covid policies as cases continue to soar to record levels.

Chinese officials have warned Shanghai residents about what they say online regarding the city’s Covid outbreak, after many complained about conditions and food shortages almost two weeks after the city was locked down.

The surge in infections has brought the Asian financial hub to a standstill, leaving many residents struggling to obtain basic food and medical supplies, report Eleanor Olcott in Taipei and Andy Lin.

Data released today suggested that Canada’s labour market strengthened further in March with the unemployment rate falling to its lowest level on record, boosting expectations for a half-point interest rate rise from the Bank of Canada next week.

The jobless rate fell 0.2 percentage points to 5.3 per cent in March according to Statistics Canada, writes Alexandra White, the lowest since comparable records began in 1976.

Lebanon and the IMF have reached a preliminary agreement for a $3bn loan facility, the first significant step towards bringing relief from an economic and financial crisis that has crippled the country since 2019.

Need to know: business

Deloitte has resigned as auditor of miner Polymetal, which could lead to the Anglo-Russian group’s expulsion from the London Stock Exchange if it cannot find a new firm to check its accounts.

Shares in Toshiba rose today after the Japanese conglomerate said it would set up a special committee to assess potential bids from private equity and other investors, opening the door for a landmark deal to take one of the country’s biggest industrial names private.

Volvo Trucks, the Swedish truck and bus manufacturer, is taking a $423mn hit in provisions for the first quarter after suspending all operations in Russia.

The move, announced on Friday, marked the latest sign of the corporate impact of the heavy international sanctions imposed on Russia since its invasion of Ukraine.

Energy groups Shell and OMV of Austria also announced large writedowns in assets linked to Russian energy projects this week. Shell will take a writedown of up to $5bn after its decision to quit Russia.

Science round up

The number of Britons living with long Covid stands at its highest level since official statistics on the phenomenon were first collected a year ago, writes Sarah Neville.

Figures from the Office for National Statistics published yesterday showed an estimated 1.7mn people, or 2.7 per cent of the UK population, reported experiencing symptoms lasting for more than four weeks after they had, or suspected they had, the disease as of March 5.

The ONS also confirmed 1.2mn people were still suffering more than 12 weeks after contracting the disease.

Get the latest worldwide picture with our vaccine tracker

And finally…

Emmanuel Macron reckons with anger and apathy as the first round of French presidential elections looms on Sunday as voters ponder a crowded field of candidates.

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