Yahoo Finance FTSE 100 Live: UK inflation falls to 6.8%; shares down again after 100-point drop yesterday
The pace of price rises in the UK dropped signficiantly in July, new figures today reveal, as inflation fell to 6.8%.
The decline was exactly in line with forecasts, and came thanks in part to lower energy prices because of the lower price cap.
Core inflation, on the other hand, remained at 6.9%, close to 30-year highs. Thhat stickiness meant the City continues to expect three more interest rate hikes from the Bank of England.
Chancellor Jeremy Hunt said: “The decisive action we’ve taken to tackle inflation is working... but we’re not at the finish line. We must stick to our plan to halve inflation this year and get it back to the 2 per cent target.”
Elsewhere, insurers Aviva and Admiral are among those posting results.
Read more on the fall in inflation here
FTSE 100 Live Wednesday
Inflation dips but rate rise worries continue
Aviva set to beat financial targets
Admiral shares jump on higher profits
FTSE closes at 7,356.88
Wednesday 16 August 2023 16:44 , Daniel O'Boyle
The FTSE 100 closed down 0.4% at 7,356.88 today, as a decline in inflation wasn’t enough to stave off interest rate fears.
The fall means the index is down more than 3% in just four days.
Insurer Admiral and Aviva bucked the wider market trend, as both were among the top risers.
City voices: London must stand firm against the US-led “war on ESG”
Wednesday 16 August 2023 15:53 , Daniel O'Boyle
“Nigel Farage has a new cause. In the wake of the scandal surrounding the closing of the former Brexit Party leader’s Coutts account, Farage announced he is focusing his energy on becoming ‘a champion and crusader for men and women who have been closed down by the banks,’” says Eva Barboni.
“In a subsequent opinion piece, Farage set out the overarching problem — woke capitalism. NatWest, in his words, had “morphed into a woke warrior” under the now-former CEO and equality champion, Dame Alison Rose, and was now focusing more on promoting “diversity and inclusion” than ‘making money.’
“This war on so-called ‘woke’ businesses may be new for Farage, but its origins are American. In recent months, US Republicans have put ‘ESG investing’—an investing approach that considers companies’ environmental, social, and governance impacts—at the forefront of the political culture war during a hotly contested election cycle.”
The Standard View:Inflation is falling, but there is a long way to go
Wednesday 16 August 2023 14:52 , Daniel O'Boyle
Could it be the beginning of the end for the cost-of-living crisis? Inflation slowed last month to 6.8 per cent, the lowest rate since February last year, thanks in large part to falls in gas and electricity prices. This means that wages are now rising faster than prices, with average basic pay surging by a record 7.8 per cent in the three months to June.
Yet for both ministers and households, it may be premature to put the champagne on ice.
FTSE slips further
Wednesday 16 August 2023 14:30 , Daniel O'Boyle
The FTSE 100 has now lost more than 250 points in just four days, having slid further this afternoon.
The index is now at 7,339.15, down 50 points from opening and at its lowest point in over a month.
Big falllers include Antofagasta,Natwest and Flutter Entertainment.
Stubborn core inflation and wage rises cast doubt on Sunak’s policy pledge
Wednesday 16 August 2023 14:27 , Daniel O'Boyle
Rishi Sunak’s promise to halve inflation by the end of the year could be in jeopardy despite another fall in the Consumer Prices Index, experts have warned.
The Prime Minister has committed to bringing down CPI to around 5.3% by the end of the year and July’s figure of 6.8% brought the measure to its lowest level since February 2022, when Vladimir Putin’s invasion of Ukraine kicked off a surge in global prices.
But commentators suggested the falls in CPI – which was down from 7.9% in June, according to Office for National Statistics (ONS) figures – may not be enough to meet Mr Sunak’s goal.
US shares to dip
Wednesday 16 August 2023 14:08 , Daniel O'Boyle
Wall Street shared are set to open slightly lower this morning, with futures for all three major indices down 0.2%.
Dow Jones futures are at 34,952.00, while S&P 500 ufutres are at 4,445.00 and Nasdaq futures at 15,068.50.
Target is among the big premarket risers, after strong results this morning.
United Utilities fined £800,000 for over-abstracting water in Lancashire
Wednesday 16 August 2023 13:43 , Daniel O'Boyle
United Utilities has been fined £800,000 after illegally abstracting 22 billion litres of water in Lancashire five years ago, the Environment Agency (EA) has said.
It caused a significant decline in the Fylde Aquifer, which is an important public water supply for residents in the North West and also helps the flows of local rivers.
The over-abstraction during a period of very dry weather in 2018 means the aquifer will take years to recover, the EA said.
Carlsberg boss ‘shocked’ by seizure of Russian business
Wednesday 16 August 2023 12:52
The chief executive of brewing giant Carlsberg has said he was “shocked” when Russian President Vladimir Putin seized its business there.
Cees ’t Hart said the company had agreed a deal to sell its Russian operations in late June, but just weeks later a presidential decree transferred the business to the Russian Federal Agency for State Property Management.
“In June, we were pleased to announce the sale of the Russian business. However, shortly afterwards, we were shocked that a presidential decree had temporarily transferred management of the business to a Russian federal agency,” he said.
Balfour Beatty cheers revenue growth but order book value falls
Wednesday 16 August 2023 12:17 , Daniel O'Boyle
The value of Balfour Beatty’s order book has lost £1 billion it has emerged, but the construction group remained upbeat as it defied economic gloom to record improved sales and declare a dividend.
The UK’s largest contractor said the order book reduced to £16.4 billion in the six months to June 30 compared with £17.4 billion at the end of the prior financial year.
That was due to some projects progressing well, but also the impact of economic conditions delaying some US commercial office work.
London’s dedicated student housing shortage laid bare in new research
Wednesday 16 August 2023 11:46 , Daniel O'Boyle
Around four students are chasing every purpose built room in London amid a shortage of accommodation, new research has revealed.
On the eve of A-level results the figures from property consultancy Savills suggest many school leavers who have not secured dedicated student digs will struggle to get some, forcing them into the general private rental sector.
Savills estimates there are 3.8 people chasing each purpose-built student bed in the capital. Its data showed 344,065 undergraduate and postgraduate students in London compared with 91,351 beds in 2021-22.
City Comment: Inflation may be down, but it is far from out
Wednesday 16 August 2023 11:08 , Daniel O'Boyle
There is much fat to chew on in today’s inflation figures. On the face of it there should be at least two cheers for the moment when headline CPI falls below wage growth. It has been a long time coming.
But the reaction from the City was pretty underwhelming, little more than a “meh” shrug. That is partly because the CPI figure came in bang on forecast. But also it did not take much of a drill down into the data to realise that the inflation war is a long way from won.
Today represents one battle, albeit a significant and symbolic one, in a long campaign that is far from played out.
City warns on ‘sticky’ core inflation after drop in CPI
Wednesday 16 August 2023 10:44 , Daniel O'Boyle
The City today welcomed the sharp fall in the Consumer Price Index but warned that “sticky” core inflation means it is too early to call the peak of the interest rate cycle.
While headline inflation dropped in line with forecasts to 6.8%, core CPI, which excludes energy, food, alcohol and tobacco and is seen as a better indicator of underlying prices, rose by a higher than expected 6.9%, unchanged from June.
Analysts were also alarmed by the services consumer price index, which rose slightly from 7.2% to 7.4%. The economics team at Nomura said in a note: “July inflation data printed stronger than expected, driven almost entirely by an upside surprise to services prices, and excess core momentum rose on the month.
Challenging conditions set to continue, warns Marshalls
Wednesday 16 August 2023 10:15 , Joanna Bourke
Marshalls,the building products specialist that has seen business hurt by the UK housing market slowdown, today warned challenging conditions are expected to continue into 2024.
Chief executive Martyn Coffey said there was a “material reduction” in first half volumes at the firm. That came as housebuilders responded to weaker demand arising from higher mortgage rates, by slowing build programmes.
The update comes just weeks after Marshalls warned on profits and said it was cutting around 250 jobs, with the workforce now standing at 2,700.
Revenue in the six months to June 30 dropped 13% on a like for like basis to £354.1 million. Pre-tax profit fell 30% to £16.7 million.
M&S up another 4%, Direct Line shares on recovery trail
Wednesday 16 August 2023 10:08 , Graeme Evans
Fresh support for Marks & Spencer shares today boosted hopes that the resurgent retailer is close to ending its four-year exile from the FTSE 100 index.
M&S’s market value now stands at around £4.5 billion after yesterday’s surprise profits upgrade caused the City to take another look at the turnaround story.
The shares surged 8% by last night’s close and rallied another 4% or 9.2p to 230.8p today, meaning the widely-held stock has jumped more than 80% this year.
However, analysts at Deutsche Bank reckon the shares are still too cheap after reiterating their “buy” recommendation and new 260p price target. They said yesterday’s update was further evidence that the business has “fundamentally changed”.
The momentum means M&S is among the top three stocks in the FTSE 250 and a contender for promotion in next month’s reshuffle of FTSE benchmarks.
The company is a founder member of the FTSE 100 but in September 2019 lost its blue-chip status for the first time after shares hit their lowest in over two decades.
After several false dawns, the turnaround efforts finally look to be paying off with profits set to grow this year and dividends poised to resume after a three-year gap.
M&S ranked second on today’s FTSE 250 risers board, only beaten by a surge of 7% or 10.65p for Direct Line Insurance on the read-across from results by rival Admiral.
Churchill and Green Flag owner Direct Line traded at 134p in January after pulling its dividend but now stands at 161.8p ahead of its own results in early September.
The FTSE 250 index was 46.02 points higher at 18,705.77, compared with the top flight’s decline of 2.04 points to 7387.60 as the mood calmed after yesterday’s interest rate jitters.
Mining stocks, however, sustained further losses as Chile’s Antofagasta retreated another 19.5p to 1433p. Among the best performing stocks, British Gas owner Centrica rose 2.4p to 144.4p.
UK catching up to peers on inflation
Wednesday 16 August 2023 09:48 , Daniel O'Boyle
Inflation in the UK remains above most other rich countries, but the rate of price rises here is at the closest its been to the G20 average in almost a year.
Economist Simon French says the gap should narrow further in October.
UK housing market continues to defy expectations, but London prices down
Wednesday 16 August 2023 09:44 , Daniel O'Boyle
UK house prices increased in June, despite soaring interest rates leading many to predict a crash, but London was the one region to report a decline.
The pace of growth dipped slightly and was well below inflation, but the average house price was still up by 1.7% in nominal terms.
The housinhg market has proved surprisingly resilient in the face of rising interest rates, which have soared to 5.25%.
In London, however, prices were down by 0.6%, though it remained the most expensive region with an average price of £528,000.
Emma Cox, MD of Real Estate at Shawbrook, said: “A modest increase in house prices sees the market yet again defying expectations in the face of fluctuating rates, and a slowdown in activity. For real estate professionals, the current phase could be an opportune time to explore new possibilities.”
“With the property market overall less busy, a reduction in competition from owner occupiers will create a favourable environment for landlords to consider expanding portfolios. With a robust demand in the rental market, landlords might consider diversifying into higher-yield options like Houses in Multiple Occupation (HMOs), which could in turn contribute to an increase in available properties for rent.”
Headline inflation fall ‘blunted’ by sticky core figure
Wednesday 16 August 2023 09:41 , Daniel O'Boyle
Dr Roger Barker, Director of Policy at the Institute of Directors, said the unchanged core inflation figure has “blunted” the positive impact of headline inflation falling.
“It will be a relief to business leaders that the headline rate of inflation is continuing its downward trend,” he said.
“However, any celebrations will be blunted by concern that the core rate of inflation, which excludes energy and food prices, is entirely unchanged. This month’s headline drop was primarily a result of the scheduled readjustment of the energy price cap.
“It’s hard to avoid the conclusion that inflation has to some degree become embedded into the behaviour of businesses and consumers. This was reflected in yesterday’s figures for annual wage inflation. Getting back to the Bank of England’s 2% inflation target will be a challenging process.”
Jamie Oliver gets £6.8 million dividend as profits rebound at his companies
Wednesday 16 August 2023 09:26 , Daniel O'Boyle
Jamie Oliver bagged a £6.8 million payout as profit rebounded at the celebrity chef’s companies in 2022.
Profits grew to £7.7 million, as a post-pandemic rebound helped revenue from franchised restaurants abroad more than double to £3.7 million. As of the end of last year, there were 70 Jamie Oliver restaurants outside of the UK.
Oliver’s media empire continued to grow as well, with television programming revenue more than doubling to £2.9 million.
That allowed Jamie Oliver Holdings to pay out a £5 million dividend, more than triple 2021’s payout. Jamie Oliver Licensing paid a further £1.5 million, though this was down from 2021.
It represents a major turnaround after the Jamie’s Italian chain collapsed in 2018 with debts of £83 million, before the restaurant sector was devastated by the pandemic.
CEO Kevin Styles, appointed last year to transform the businesses, said: “The Jamie Oliver brand continues to resonate with audiences around the world.”
Miners and NatWest lead FTSE 100 lower, M&S up another 3%
Wednesday 16 August 2023 08:27 , Graeme Evans
European markets remain under pressure with the FTSE 100 index at a fresh one-month low, down 16.48 points at 7373.16.
Mining stocks sustained more losses due to ongoing fears over China’s economy, resulting in Rio Tinto being down 69.5p at 4517.5p and Antofagasta 34p lower at 1418.5p.
They were joined on the fallers board by a decline of 3.6p to 230p for NatWest as the worst performing bank in London’s top flight.
Shares in insurers Aviva and Admiral performed well on the back of interim results, rising by 4.7p to 384.6p and 103p to 2302p respectively.
The FTSE 250 index was 3.72 points lower at 18,656.03, with Balfour Beatty off 21p to 345p following its results. Marks & Spencer shares made further progress after yesterday’s profits upgrade, rising by another 3% or 6.4p to 228p.
FTSE opens down, but pound nudges up
Wednesday 16 August 2023 08:21 , Simon Hunt
A few minutes into the day’s trading session in London, the FTSE 100 is down 0.24%, but the pound is up slightly against the dollar after core inflation figures came in slightly higher than expected.
Click through the buttons below to view the key market data.
Inflation data ‘will not move the dial’ for Bank
Wednesday 16 August 2023 08:19 , Daniel O'Boyle
Tim Graf, head of macro strategy for EMEA at State Street Global Markets, said that today’s inflation surprise won’t change much for the Bank of England, which is still expected to raise interest rates when the Monetary Policy Committee next meets on 21 September.
“After yesterday’s stronger wage numbers, today’s slight upside surprise on CPI will probably not move the dial for the Bank of England too much,” he said. “A further 25bps hike is fully priced for the September meeting and that should be delivered.”
“The main question is whether terminal rate pricing, which has now risen back to 6%, only 50 basis points off its cycle highs, is justified. We do not think it is. Other price data such as RPI and PPI have normalised and there are still large base effects in portions of the CPI basket that will fall out. And, outside of a big one-off bonus to the health sector in yesterday’s labour market data, we would have been talking about that being the weakest employment report since COVID.”
“Core inflation is sticky and certainly delays any talk of an imminent pause, but the MPC is becoming increasingly clear that wants to assess the effects of what it has done thus far and there is enough evidence of slack building in the economy that an additional 25bps hike next month is all that is needed.”
Private health insurance boom boosts Aviva
Wednesday 16 August 2023 08:13 , Daniel O'Boyle
Aviva is set to to beat its financial targets after seeing a boom in health insurance as those looking for treatment look for alternatives to long NHS waiting lists.
The insurer saw a 58% jump in health insurance sales, though this still makes up only a small part of its business with £84 million in premiums.
“What we’re seeing is customers worried that they won’t be able to get treatment when they need it, that they don’t want to wait too long,” CEO Amanda Blanc said. “But also mental health and GP appointments. So we are definitely seeing the impact of that coming through.”
Operating profit rose by 8% to £715 million.
Blanc said: “Aviva’s performance and prospects have been transformed from just a few years ago. Today’s Aviva is about delivery and momentum, and these results show that Aviva is consistently meeting its promises.
“We expect to exceed our financial targets and we are making progress each quarter, as we said we would. I remain confident and excited that there is so much more Aviva can and will achieve.”
Shares are up 1.5% to 385.4p.
Admiral shares up 4% on profits rise
Wednesday 16 August 2023 08:09 , Simon Hunt
Shares in Admiral rose as much as 4% after markets opened this morning as investors cheered a rise in profits.
Revenues rose 22% to £2.2 billion while pre-tax profits nudged up 4% to £234 million, as Admiral touted its “diversification strategy”, which saw non-UK Motor products delivering 19% customer growth.
However, the firm cut its dividend by 15% as it warned of a “backdrop of continuing elevated levels of claims inflation.”
Chancellor: 'We’re not at the finish line’
Wednesday 16 August 2023 08:04 , Daniel O'Boyle
Chancellor of the Exchequer Jeremy Hunt said: “The decisive action we’ve taken to tackle inflation is working, and the rate now stands at its lowest level since February last year.
“But while price rises are slowing, we’re not at the finish line. We must stick to our plan to halve inflation this year and get it back to the 2 per cent target as soon as possible.”
Read more on the drop in inflation here
Food inflation down sharply, but beer and wine rises even faster
Wednesday 16 August 2023 07:32 , Simon Hunt
Food inflation showed signs of abating, ONS data showed today, with prices down by as much as 4% in some categories.
But beer and wine continued to rise higher, with beer inflation hitting 11.8%.
‘A return to economic normalcy’?
Wednesday 16 August 2023 07:19 , Daniel O'Boyle
The drop in inflation could be a major step back to normal, Mike Randall, CEO of Simply Asset Finance, said, and will give major hope to small businesses.
He said: “A consecutive drop in inflation signals that a return to economic normalcy could be within reach, giving SME’s hope for future growth.
“While ONS business data still reports inflation as one of the main concerns for 16% of business leaders, pressures are easing in other areas. Fewer businesses are reporting energy prices as their main concern, with 24% even reporting having no concerns for their business.
“From high interest rates to stubborn inflation, businesses have become experts at adapting to the challenges the economy presents to them. Yet, whilst businesses have remained positive through tactics like managing cashflow and embracing technology, lenders need to recognise their significance in keeping businesses buoyant. This means providing consistent and flexible financial support, especially through challenging economic periods.”
FTSE 100 seen lower, Asia markets in the red
Wednesday 16 August 2023 07:18 , Graeme Evans
Leading Wall Street indices closed more than 1% lower last night and Asia markets are in the red this morning as the mood of risk aversion continues.
CMC Markets expects the FTSE 100 index to open 18 points lower at 7371, having fallen by 1.6% in a poor session for investors across Europe.
The selling follows a run of poor updates from China’s economy, as well as expectations for more interest rate rises in the UK after yesterday’s record wage growth figures.
In addition, stronger-than-expected US retail sales have increased the chances that the Federal Reserve will take longer to loosen monetary policy.
The S&P 500 index fell 1.2% and the Dow Jones Industrial Average closed 1% lower as ratings agency Fitch warned it could downgrade the country’s major banks. Shares in lenders including Bank of America and JP Morgan Chase fell by around 3%.
In Asia, the Hang Seng index is down by 1.5% and the Shanghai Composite off 0.7%.
Inflation falls to 6.8%
Wednesday 16 August 2023 07:04 , Daniel O'Boyle
Inflation in the UK fell to 6.8%, the lowest level since February 2022.
The drop of more than 1 percentage point was expected by economists, and was in large part due to the lower energy price cap coming into effect from July.
The sharp decline in inflation may not be all good news though. Core inflation, which strips out food and energy price rises to get a better picture of domestic price pressures, was unchanged, at 6.9% and close to 30-year highs. That figure tends to be watched more closely by the Bank of England.
ONS Deputy Director of Prices Matthew Corder said: “Inflation slowed markedly for the second consecutive month, driven by falls in the price of gas and electricity as the reduction in the energy price cap came into effect.
“Although remaining high, food price inflation has also eased again, particularly for milk, bread and cereal.
“Core inflation was unchanged in July, with the falling cost of goods offset by higher service prices.”
Morning refresh: What you need to know to start the day
Tuesday 15 August 2023 22:31 , Simon Hunt
Good morning from the City desk of the Evening Standard.
All eyes are on the UK inflation numbers this morning. Many economists expect the data to show inflation has fallen by as much as 1%. But mortgage holders hoping the news will bring some relief could be mistaken.
Yesterday’s remarkably strong wages data explain a lot. Not least why the UK economy has refused to tip into recession. With wages rising at about 8% and unemployment still little more than 4% there is too much demand sloshing around the system for GDP to contract.
For Andrew Bailey, the data means the Monetary Policy Committee has no option than to make borrowing money ever more expensive to dampen the hot spots in the economy.
Here’s a look at some of our other headlines from yesterday:
L&G first half profits more than halved to £324 million largely due to interest rates
Marks & Spencer flags up strong trading and raises profit expectations for the year
Billionaire Issa brothers sell dozens of stores in bid to pay off debts
UK boss of world’s biggest jewellery brand Pandora makes plea for end to tourism tax
As UK inflation numbers come in at 7am, we’ll also be expecting interim results from construction giant Balfour Beatty, building materials maker Marshalls and insurance firms Aviva and Admiral.
