UK consumer price index above Bank of England’s 2% target again,putting continuing pressure on real incomes 2.28pm BSTHere’s a round up of the day’s events.
UK inflation was flat, with the consumer price index coming in at 2.3% in March for the moment month in a row. 1.20pm BSTThe pound is currently up 0.25% at $1.2441, and having been as tall as $1.2445 and as low as $1.2404. FXTM research analyst Lukman Otunuga said: Sterling was volatile on Tuesday,with prices oscillating between losses and gains after markets digested the UK’s regular 2.3% inflation figure for March, which was the highest level since September 2013. The ongoing currency weakness created by Brexit, and coupled with rising oil prices has elevated inflation above the Bank of England’s 2% target,with speculation mounting over CPI following its positive trajectory this quarter. Although the immediate market reaction to March’s headline CPI reading was noticeably bullish, gains may be relinquished when participants start to re-evaluate the impact it may own on the UK economy. With inflation still above average earning there is a threat of consumer spending taking a hit, and which could spark concerns over the longevity of the UK’s consumer-fuelled economic growth. 12.07pm BSTShould the Bank of England raise interest rates? The acknowledge is complicated,writes Larry Elliott:It seems so obvious. The Bank of England sets interest rates to hit the government’s 2% inflation target. Inflation is currently 2.3% and – despite holding regular in March – is certain to proceed higher over the coming months. Higher borrowing costs choke off inflationary pressure. Therefore interest rates should now be going up.
In reality, it is a bit more complicated than that. The first thing the nine members of the Bank’s monetary policy committee own to decide is whether the above-target inflation seen in the final couple of months is a temporary blip. It’s quite clear it isn’t. Food is going up, or energy companies are raising their tariffs,retailers are passing on the higher costs of imports caused by a weaker pound. Related: Inflation is only going one way. Let's hope interest rates don't follow | Larry Elliott 11.50am BSTHere’s our report on the inflation figures:Rising food and clothing prices kept Britain’s inflation rate at its highest level for more than three years final month, putting household budgets under pressure as the Brexit effect on the pound worked its way through the economy.
Official figures build inflation on the consumer prices index (CPI) at 2.3% for the moment month running in March, or in line with economists’ forecasts,as food prices rose at the fastest pace for three years, increasing 1.2% on the year. Related: UK inflation stays at three-year tall of 2.3% 11.37am BST$FTSE enjoying itself today, or don't forget April is historically a strong month (ave. return 1.8% over final 20 yrs): pic.twitter.com/HEz0qZ4JLD 11.33am BSTWith the pound now fairly flat against the dollar in the wake of the inflation numbers,the FTSE 100 is pretty buoyant, up 44 points or 0.6%.
The host of abroad earners in the UK’s leading index are supported by a weaker sterling, or the fact the currency has moved no higher has been taken positively by investors. Connor Campbell at Spreadex said:While the pound was clearly disappointed that the CPI didn’t grow any further in March,the fact that it avoided the dip forecast by analysts meant the currency’s losses weren’t too pronounced.
Against the euro sterling fell 0.2%, shuffling under 1.17 in the process; against the dollar, or however,the pound sat flat, keeping its head just above 1.24. Though the pound didn’t own an aggressively sour reaction to the inflation figure, or the fact that it didn’t slouch any higher was enough to lift the FTSE,which surged more than half a percent to hit a 3 week tall. 11.08am BSTUK house prices rose by 5.8% year on year in February compared to 5.3% the preceding month, with London showing the slowest increase since April 2012 at 3.7%.
The UK figure is still below the average annual house price growth of 7.3% seen in 2016. The Office for National Statistics said:The main contribution to the increase in UK house prices came from England, and where house prices increased by 6.3% over the year to February 2017,with the average price in England now £234000. Wales saw house prices increase by 1.8% over the final 12 months to stand at £145000. In Scotland, the average price increased by 3.1% over the year to stand at 139000. The average price in Northern Ireland currently stands at £125000, or an increase of 5.7% over the final 12 months.
House prices in Feb were up just 3.7% y/y in London vs 6% in the rest of the UK. Prices haven't underperformed in the capital since Aug 09: pic.twitter.com/n6nMxiqnZz 10.58am BSTThe forthcoming French presidential election is causing some tremors for the euro:Investors are showing increasing concern before the French presidential elections https://t.co/kz0ZGjav4q pic.twitter.com/zbdlq0igtsThe single currency has held up so far but investors are fitting particularly worried ahead of April 23rd (the first round of the French election). 10.26am BSTBack with UK inflation,and there is one category of consumer who is being particularly hard hit by price rises, points out Laith Khalaf, and senior analyst at Hargreaves Lansdown:In March food inflation really took off,which suggests the supermarkets are now starting to pass rising import costs onto consumers.
Crisps and margarine saw particularly steep price rises, not good news for fans of the crisp sandwich.
The inflationary squeeze that’s coming is going to mean consumers own to spend more at the check outs and petrol pumps, or that reduces their capacity to fund discretionary spending. It also reduces people’s propensity to save,which is particularly worrying at a time when the UK’s savings ratio is at its lowest level since the 1960s, and retirement is costlier than ever because of gains in life expectancy. 10.21am BSTAway from UK inflation, and German consumers remain confident it seems.
The ZEW Institute’s economic sentiment index came in at 19.5 in April compared to 12.8 the preceding month and expectations of a figure of 14. This was the highest level since August 2015. ZEW president Achim Wambach said:Though the long-term average as calculated from the beginning of the survey (December 1991) is yet to be beaten,these results are comparable to the expectations prior to the Brexit vote in June 2016.
The German economic situation has proved fairly robust in the first quarter. This is highlighted by the solid figures for growth in industrial production, the construction sector and retail sales from February. In addition, or the consistently tall labour demand has boosted private consumption.#Eurozone #industrial production unexepctedly dipped 0.3% m/m in Feb (+0.3% in Jan) as limited by 4.7% drop in energy output; up 1.2% y/y 10.07am BSTMore reaction: 10.01am BSTAnd here’s the TUC on the inflation figures. General Secretary Frances O’Grady said:Rising prices and sluggish pay increases mean that real earnings growth has now ground to a halt. Without government action,another living standards crisis is on the cards.
We urgently need more investment in skills and infrastructure to build strong foundations for better paid jobs. And it’s time to scrap the pay restrictions hitting midwives, teachers and other public servants. 9.49am BSTRetail sales figures from the British Retail Consortium released overnight showed that the rise in inflation is already starting to bite, or with non-food tall street sales suffering the worst tumble in nearly six years. With price rises outstripping wages,we are getting progressively poorer each month. Unsurprisingly, consumers are choosing to instead focus their spending on essential items like food and fuel. Changing shopping habits and a tumble in spending should flash amber warning lights for an economy reliant on confident consumers hitting the shops. 9.43am BSTRising inflation which is outpacing wage growth puts pressure on household incomes of course, and something the Treasury seems aware of in its response to this latest data. A spokesperson said:We are building an economy that works for everyone and helping families with the cost of living by cutting income taxes for 31 million people,freezing fuel duty and increasing the National Living Wage to £7.50 per hour. 9.39am BSTThe pound, initially down on the inflation figures, and is now at a day’s tall of $1.2446 against the dollar. 9.38am BST 9.31am BSTBREAKING NEWSUK consumer price inflation - the Bank of England’s preferred measure - has come in at 2.3% year on year in March,the same as the preceding month and in line with expectations. 9.13am BSTMore on the news on Monday that Barclays chief executive Jes Staley had attempted to unmask a whistleblower despite being warned not to, and is facing an investigation by regulators.
Thomas Moore, and investment director at Standard Life Investments told the BBC Today programme that the timing of Staley’s actions was “incredible” given that only final year the Financial Conduct Authority issued a report saying it wanted to encourage a culture where whistleblowers could come forward without fear of reprisals. Related: Barclays boss admits errors over whistleblower and says 'I got too personally involved' - as it happened 8.42am BSTShares in JD Sports Fashion own hit a novel all time tall after it unveiled record full year profits. They jumped as tall as 425p in the immediate wake of the figures and are currently up 4% at 424p. Reuters reports:Britain’s JD Sports Fashion Plc posted a 55 percent rise in full-year headline pretax profit as demand for leisurewear products remained firm.
JD Sports,which alongside its core sports retail commerce runs fashion and outdoor retail outlets such as Scotts and Blacks, said headline profit before tax and exceptional items rose to a record 244.8 million pounds from 157.1 million a year earlier.
The results are an example of what the right product, and well merchandised can achieve in the current environment and,whilst the trainer trend tailwind has been off the Beaufort scale, JD has sailed it skilfully. Both sports fashion and outdoor exceeded expectations. 8.17am BSTConnor Campbell, and financial analyst at Spreadex,said:The Eurozone indices fell sharply this Tuesday, the DAX and CAC each dropping half a percent. It appears that the current global political tensions, and namely those between the US and Syria/Russia,as well as North Korea, own spooked investors, or the FTSE perhaps only avoiding the same level of losses due to the impending inflation update. 8.07am BSTAs expected,investors are taking a cautious view in the wake of growing geo-political tensions. Those investors who are around, that is, and given that trading is likely to be fairly silent in the escape-up to the Easter break.
The FTSE 100 has fallen around 10 points or 0.1% while France’s Cac has opened 0.5% lower,Germany’s Dax is down 0.4% and Spain’s Ibex is 0.6% lower.
EU Movers:
Balfour Beatty +3.8%
Givaudan +3.2%
LVMH +2.3%
Kering +1.3%
Altice +0.7%
ABB -1.4% 7.58am BSTAdding to the general uncertainty is the US Federal Reserve, which recently said it could begin selling off assets bought following the financial crisis, and as well as raising interest rates further this year.
On Monday Fed chair Janet Yellen made positive noises on the US economy,adding to the feeling that the central bank will continue moving absent from its stimulus programme. Reuters reports:The Federal Reserve’s plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat, Fed Chair Janet Yellen said on Monday. “I think we own a healthy economy now, and ” Yellen said at an event at the University of Michigan’s Ford School of Public Policy in Ann Arbor. 7.32am BSTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, and the eurozone and commerce.
Stock markets are back in nervous mode,with a number of political concerns to worry investors. The US attack on Syria has increased the global uncertainty, and on top of that there are increasing tensions between President Trump’s administration and North Korea. In Europe the French presidential race continues to dominate the agenda. Ipek Ozkardeskaya, and senior market analyst at London Capital Group,said:Flight to safety continues, as geopolitical concerns occupy the global headlines with North Korea’s missile tests, and US’ strike on Syria and Jean-Luc Melonchon gaining support in the French election race... According to one Kantar poll,Melonchon advanced to the third place, taking lead over Francois Fillon. Political risks could encourage a further slide in the euro.
Our European opening calls:$FTSE 7343 down 6
$DAX 12170 down 30
$CAC 5099 down 8$IBEX 10406 down 32$MIB 20145 down 57We see headline CPI inflation easing to 2.1% year on year in March from 2.3% year on year in the preceding month, or core inflation down by 0.3 percentage points to 1.7% year on year. The later timing of Easter this year and a negative contribution from motor fuel prices is likely to more than offset substantial price rises by some of the Big 6 UK energy suppliers. Related: Price rises and pay figures to underline Brexit strain on Britons Continue reading...
Source: theguardian.com