Yahoo Finance FTSE 100 Live: Food and energy costs drive inflation rate to 11.1%
The UK’s annual rate of inflation today surged by more than expected to a fresh four-decade high of 11.1%.
Rising energy and food bills caused the spike in October, with today’s figure from the Office for National Statistics comparing with 10.1% in September and City forecasts of around 10.7%.
The core inflation rate remained at 6.5%, adding to pressure on the Bank of England after recent big interest rate rises.
FTSE 100 Live Wednesday
Inflation hits 11.1%, adds to rates rise pressure
British Land reports robust London office market
Deliveroo quits “highly competitive” Australian market
FTSE 100 lower as inflation tops 11% hitting stocks exposed to impact of big interest rate rises
Wednesday 16 November 2022 16:26 , Michael Hunter
London’s FTSE 100 fell in late trade on the day UK inflation reached its highest level since the mid-1980s, with stocks exposed to the prospect of big rate rises from the Bank of England among the biggest fallers.
The main UK share index lost 23 points, or 0.3%, to 7346.62. The eye-watering rise on the consumer price index was the main talking point of the trading session.
Some of the biggest falls of the day came for big names from the housing market, which faces tighter mortgage availability as the Bank of England lifts rates to tame inflation toward its 2% target. Roghtmove, the internet property portal that opens the way into the housing market for millions of people, fell 28p to 538p, a drop of almost 5%. Home builder Persimmon fell 3% or 40p to 1263p.
Fund managers also fell. The sector can lose business from riskier and actively managed funds when higher rates increased the returns on offer from saster savings accounts, Hargreaves Lansdown eased by 40p to 869p, down over 4%. Schroders lost 3%, or 15p, to 452p.
Big-name high street stocks that depend on pressured household budgets to generate revenue took a hit. Sainsbury was down 6p to to 210p, a drop of almost 3%. Next, the fashion retailer, fell 174p to 5552p, down 3%.
New York stocks fall as retail sales numbers interrupt run of reassuring inflation-linked data
Wednesday 16 November 2022 15:04 , Michael Hunter
Wall Street’s S&P 500 slipped in early New York trade after an interruption in the run of economic data that had pointed to potential smaller interest rate rises.
Core retail sales for October came in at 1.3%, much higher than the 0.4% forecast by analysts.
The broad US stock market index fell 0.5% to 3972,88, a fall of over 20 points.
Chancellor Jeremy Hunt due in the spotlight as big week for the economy approaches its main event
Wednesday 16 November 2022 14:55 , Michael Hunter
After inflation data hit a 41-year high shedding new light on the extent of the UK’s cost-of-living crisis, attention now turns to the main event of a blockbuster week for the economy.
Chancellor Jeremy Hunt is expected to give further details on the government’s plans for its support package for energy costs, which he has already announced will end in April, rather than running for the two years envisioned by the Truss government.
Markets will be keeping close watch on the tax and spending plans, although Hunt is seen by international investors as a safe pair of hands after the chaos caused by his predecessor, Kwasi Kwarteng.
Read more here on the Autumn Statement and track the big week so far for the UK economy and there is more detail here on what we know about the Chancellor’s plans.
New York stocks set to slip after run of reassuring prices data ends with strong retail sales numbers
Wednesday 16 November 2022 14:02 , Michael Hunter
Wall Street’s S&P 500 was on course to slip in opening trade after stronger-than-expected retail sales numbers for October interrupted a run of data that looked supportive of smaller rate hikes from the Federal Reserve.
Core retail sales for the month rose 1.3% according to the Commerce Department, higher than the 0.4% forecast.
The broad New York stock index was expected to ease by a couple of points to 3996.75. It rose by over 30 points during the previous session.
Inflation soars to 11.1%: City experts and UK business people react
Wednesday 16 November 2022 12:40 , Michael Hunter
Inflation is once again the talk of the town, from cab ranks and boardrooms to shop floors and dealing rooms across the capital.
Londoners are trying to work out what it means for the cost-of-living crisis, energy bills, interest rates and the mortgage market now the consumer price index is above 11% for the first time since the early 1980s.
Here is a round-up of the latest reaction from leading experts in the City and beyond.
James Smith, developed market economist at Dutch bank ING: “October’s 11.1% inflation rate could mark the peak. But it’s unlikely to fall below double-digits until early next year, and the Bank of England is undoubtedly worried about inflation linked to the tight jobs market. We expect headline rates to stay in double-digits until at least February next year.”
Rob Clarry, investment Strategist at wealth manager Evelyn Partners: “While the expected peak in UK interest rates had lowered recently after the Governor of the Bank of England, Andrew Bailey, suggested that market expectations were too lofty, overshoots like this will only raise suspicions that inflation could remain sticky.”
Jake Finney, economist at accountancy giant PwC: “The outlook for inflation will depend primarily on the size and shape of the energy price guarantee. If the energy price guarantee comes to an end in March then we could see inflation reach a new peak in April as household energy bills potentially rise by an additional 50%.”
Dr Jackie Mulligan, founder of the local shopping platform, Shopappy: “The current level of inflation has taken a sledgehammer to millions of small independent businesses. Their costs are going up at the same time that their sales are coming down. Millions of small businesses are in an unimaginably difficult place, financially and emotionally. We have businesses on our platform who are facing a 500% increase in their energy bills and operating with no clarity on the support mechanisms currently in place, let alone after April. It’s a savage time to be a small independent retailer.”
Sam Alsop-Hall, chief strategy officer at healthcare and NHS recruiter, Woodrow Mercer Healthcare: “Our business has grown over 300% from 2019 to 2022 so you’d think confidence would be sky high. However, rising interest rates, a contracting economy and soaring inflation are making us more and more conscious of hiring decisions, when to make investments in our infrastructure and also how long we can continue without making cutbacks. The current business climate is more challenging for us than the pandemic ever was.”
Shares in Sage and BAE rally, FTSE 250 falls 1%
Wednesday 16 November 2022 09:58 , Graeme Evans
Strong results from accounting software firm Sage today ensured the technology sector took a rare turn at the top of the FTSE 100 index.
Shares jumped 6% to near their high for the year as the small business provider of finance, HR and payroll tools revealed a 9% rise in recurring revenues to £1.8 billion and 2% lift in underlying profits to £377 million.
Despite economic uncertainty, boss Steve Hare struck an upbeat tone by forecasting margin growth in 2023.
Sage’s 45.6p rise to 801.4p made it the best performing blue-chip stock as the FTSE 100 climbed 11.52 points to 7380.96.
BAE Systems also lifted another 28.2p to 757.2p after yesterday’s strong update led Deutsche Bank to raise its target price to 1000p.
The FTSE 250 index fell more than 1% or 230.57 points to 19,225.31, but Hill & Smith surged 7% or 76p to 1168p as the road safety barriers firm reported trading at the top end of City forecasts.
Elsewhere, Deliveroo shares were under pressure, falling 3% or 2.96p to 96.64p after it quit the “highly competitive” Australian market.
Deliveroo exits “highly competitive” Australian market
Wednesday 16 November 2022 08:56 , Graeme Evans
Food delivery firm Deliveroo today announced it is to end its operations in Australia.
It said: “The market is highly competitive with four global players, and Deliveroo does not hold a broad base of strong local positions.”
In the first half of 2022, the Australian business represented about 3% of Deliveroo's total gross transaction value and negatively impacted adjusted margin by 30 basis points.
Chief operating officer Eric French said: “This was a difficult decision and not one we have taken lightly.”
Deliveroo’s shares fell 0.3p to 99.3p, having listed at 390p in April 2021.
Sage leads FTSE 100 higher, BAE up another 2%
Wednesday 16 November 2022 08:29 , Graeme Evans
The FTSE 100 index is 17.35 points higher at 7386.79, with accounting software firm Sage one of the strongest performers after its annual results sent shares up 3% or 25.2p to 781p.
BAE Systems improved another 2% or 18.6p to 757.2p after Deutsche Bank lifted its price target on the defence group to 1000p following yesterday’s strong trading update.
Other risers included credit checking firm Experian, which added 18p to 2869p on the back of profits growth in its half-year results.
The FTSE 250 index fell 46.03 points to 19,409.85, with shares in CMC Markets trading 18.5p lower at 249.5p after it posted a first-half profit of £36 million.
Road infrastructure products firm Hill & Smith was the leading riser in the FTSE 250, lifting 7% or 78p to 1170p after it said full-year results will be at the top end of City forecasts.
London office market ‘robust’ says British Land, but investment interest in real estate slows in the second half
Wednesday 16 November 2022 07:57 , Michael Hunter
Major London landlord British Land has said the capital’s office market remains robust, but inflation means it is slowing down in the second half as real estate investors take longer to make decisions as interest rates rise.
Industries that provided the biggest take up in the first half as it let almost 5 million square feet in the City and the West End were banking and finance, professional services and creative over the six month period to 30 September.
The real estate investment trust added: “After a strong start to 2022, investment markets were more subdued in the half with investors pausing to assess the impact of rising interest rates and inflation.”
It added: “Certain investors are actively looking to allocate capital to physical real estate but are likely to postpone making a decision until there is more clarity on the outlook.”
More rate rises seen after inflation hits 11.1%
Wednesday 16 November 2022 07:56 , Graeme Evans
Economists think today’s big leap in CPI inflation from 10.1% in September to a new 40-year high of 11.1% in October will mark the peak.
The bulk of the rise in inflation was due to a 24.7% month-on-month leap in utility prices, which followed the Ofgem price cap rising from £1,971 to the government’s energy price guarantee level of £2,500.
Without that price freeze, Capital Economics points out that utility prices would have pushed up CPI inflation to 13.8%.
The consultancy is watching three factors to determine whether 11.1% marks the peak, including the energy price cap after the government’s current price freeze ends in April.
It is also looking at current strength and stubbornness of core inflation, which stayed at 6.5% in October, and whether today’s rise in food inflation from 14.8% to 16.5% goes further.
Chief UK economist Paul Dales said: “Even if October marks the peak in CPI inflation, the inflation battle is not yet won.
“That partly explains why the Chancellor will announce a big fiscal consolidation (perhaps of £54bn, 2% of GDP) tomorrow and wholly explains why the Bank of England may yet have to raise interest rates from 3% to 5%.
Manufacturing input costs up by almost a fifth
Wednesday 16 November 2022 07:45 , Graeme Evans
Input costs faced by manufacturers rose by 19.2% in the year to October, down from 20.8% a month earlier.
Prices of crude oil and chemicals all provided downward contributions to the change, offset by higher fuel and food costs.
The annual rate has now been positive for 23 consecutive months, although it has slowed for the fourth consecutive month and is down five percentage points from the record high of 24.2% in June.
The Office for National Statistics added that the average price of products leaving the factory gate rose by 14.8% in the year to October, down from 16.3% in September.
The rate has been positive for 22 consecutive months, but has slowed for the third consecutive month.
Inflation hits 11.1%, gas prices up 130% in a year
Wednesday 16 November 2022 07:35 , Graeme Evans
Today’s inflation rate of 11.1% follows a 130% surge in household gas prices and around 66% for electricity over the past year.
Increases across a range of food prices also pushed up inflation. Average petrol prices fell in the month but diesel rose, taking the disparity in price between the two to the highest on record.
The Office for National Statistics also highlighted the disproportionate impact of rising and food prices on lower income families.
It said that the consumer prices index annual inflation was 11.9% for low-income households and 10.5% for high-income households.
