Food prices could increase even more amid international export bans. We’ll also look at this week’s stock market carnage, IRS changes and the continued push for action on student loans.
But first, learn more about how Europe and Russia are escalating their energy showdown amid soaring oil prices.
Export bans threaten to push food prices higher
Soaring food prices both in the U.S. and abroad have prompted countries to ban exports of core agricultural commodities, pushing up domestic food prices and leading agronomists to wonder what additional crops could face supply constraints on their way to grocery stores.
India’s partial ban on wheat exports announced last weekend increased the winter wheat crop prices by more than 8 percent before leveling off slightly on Wednesday. The decision compounded a crunch on the commodity set off by the war in Ukraine, often referred to as the breadbasket of Europe.
“There was some general thinking that India was going to be able to fill a lot of that supply gap that Ukraine historically filled, but it’s less likely to fill it this year,” Mark Jekanowski, a research economist with the Agriculture Department and chairman of its World Agricultural Outlook Board, said in an interview.
Food inflation in the U.S. is already at a 40-year high, with the annual index for consumer food prices up 9.4 percent in April — the largest 12-month increase since 1981 — according to the Department of Labor.
Meat, poultry, fish and egg prices increased by more than 14 percent over the last year, the biggest jump since 1979.
According to a list compiled by the International Food Policy Research Institute, a Washington-based nonprofit, 20 countries now maintain export bans on various foodstuffs, contributing to a 30 percent rise in global food prices.
The Hill’s Tobias Burns has more here.
Stocks continue to fall, briefly enter bear market
The S&P 500 index of major U.S. stocks continued a seven-week decline on Friday, briefly meeting the definition of a bear market.
The S&P closed almost even with its opening level Friday after falling to as low as 3,837 in the afternoon, down from a January high of around 4,800 points.
The index was briefly down 20 percent from its most recent record high, the formal definition of a bear market.
The Dow Jones Industrial Average also ended the day flat, while the Nasdaq closed with a loss of 0.3 percent.
The stock drops have followed a recent interest rate hike by the Federal Reserve of 50 basis points as the U.S. central bank seeks to curb inflation, which is at a 40-year high.
The core driver of inflation has been supply chain disruptions and demand hikes following private sector shutdowns during the coronavirus pandemic. Republicans have also pointed to the Biden administration’s fiscal stimulus packages as well as negligence on the part of the Federal Reserve.
IRS to pay 5 percent interest to individuals with delayed tax refunds
The IRS will start paying 5 percent in guaranteed interest to individuals with delayed tax returns beginning in July, up a percentage point from the last interest rate hike that took effect in April.
The agency will also pay 4 percent interest on delayed corporate tax returns,
5 percent on underpayments on tax returns and 7 percent for “large corporate underpayments,” the IRS said Friday.
The federal government regularly spends billions of dollars in interest on delayed returns. The IRS has paid out almost $14 billion in refund interest in the last seven fiscal years, according to a Government Accountability Office (GAO) report published in April. The GAO estimated such payments totaled $3.3 billion in fiscal 2021 alone.
The number of delayed returns still numbers in the tens of millions, having skyrocketed during the pandemic as the IRS shut facilities and diverted resources to administer benefits like the child tax credit. By law, the agency has 45 days to process a tax refund. The agency says it gets 90 percent of refunds issued within 3 weeks.
Check out more here from Tobias.
Black Caucus leaders want Biden meeting on student debt
The Congressional Black Caucus is seeking a meeting with President Biden to discuss student loan debt, calling on the White House to approve broad-based cancellation of federal debt through executive action.
“The $1.7 trillion student loan debt crisis is a racial and economic justice issue disproportionately impacting Black communities across the nation,” Rep. Joyce Beatty (D-Ohio), chair of the Black Caucus, said in a written statement on Friday.
The call comes after Senate Democrats met with Biden earlier this week to push for significant action on student loans. Sen. Raphael Warnock (D-Ga.), who attended the Wednesday meeting along with Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.), said he met with Biden to “stress the urgency” of the issue and “how important it is to Georgians.”
Biden supported canceling at least $10,000 in federal student loan debt per borrower during his 2020 presidential campaign, though many in his party want him to go as high as canceling $50,000 or wiping out the debt entirely.
Aris has more here.
Good to Know
The U.S. military is working to figure out whether the first deliveries of infant formula from Europe to the United States will be contract flights arranged by the Defense Department or military aircraft, the Pentagon’s top spokesperson said Friday.
Operation Fly Formula — a new government initiative to address the domestic formula shortage — will likely fly badly needed baby formula from Switzerland to the U.S. using chartered commercial flights arranged by U.S. Transportation Command, press secretary John Kirby told reporters.
Here’s what else have our eye on:
Russia is cutting off its supply of natural gas to Finland as of Saturday as Helsinki moves forward with its effort to join NATO in response to Moscow’s invasion of Ukraine.
Twenty-two congressional Democrats on Thursday urged caution over the European Union’s plan to replace fossil fuel imports from Russia with liquefied natural gas (LNG) infrastructure.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.