Consumer prices in the UK shot up in April, setting a record pace of inflation, official data showed on Wednesday, as pressure continues to mount on the Bank of England to rein in spiralling costs.
Versus the prior month, consumer prices were up 2.5% in April, accelerating from March’s 1.1% rise, but short of market forecasts - according to FXStreet - of a 2.6% month-on-month rise.
Annually, consumer prices jumped 9.0%, accelerating from March’s 7.0% rise, but again was slightly behind market expectations of 9.1%.
It was the fastest measured inflation rate since records began in 1989, and the ONS estimates it was the highest since 1982.
Grant Fitzner, chief economist at the ONS, said: ‘Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect. Around three-quarters of the increase in the annual rate this month came from utility bills.’
AvaTrade’s Naeem Aslam added: ‘Consumers are struggling to meet their daily needs, and now the pressure is even more on the Bank of England to do more to control inflation. But the fact is that the BOE is walking on a fine line, and it can only do so much to control inflation by increasing the interest rate.’
Turning to producer prices, these were up 1.1% in April, slowing considerably from March 4.6% growth.
Annually, producer prices were up 18.6%, unchanged from the previous month.
‘Inflationary pressures continue to impact businesses as well as households, with soaring energy prices further driving up the consumer price index,’ said Helen Dickinson, chief executive of the British Retail Consortium.
‘These higher energy prices, along with a tight labour market, and the huge costs of moving goods around, are impacting all retailers. Food production has been particularly hard hit, with historically high global food prices, rising costs of animal feed, and disruption in supplies as a result of the Ukraine war.’
Sterling was lower against the dollar following the inflation announcement.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,511.76
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Hang Seng: down 0.2% at 20,571.85
Nikkei 225: closed up 0.9% at 26,911.20
S&P/ASX 200: closed up 1.0% at 7,182.70
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DJIA: closed up 431.17 points, 1.3%, at 32,654.59
S&P 500: closed up 2.0% at 4,088.85
Nasdaq Composite: closed up 2.8% at 11,984.52
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EUR: down at $1.0517 ($1.0534)
GBP: down at $1.2431 ($1.2465)
USD: down at JP¥129.19 (JP¥129.29)
Gold: down at $1,811.80 per ounce ($1,820.68)
Oil (Brent): down at $112.54 a barrel ($115.10)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday’s key economic events still to come
1100 CEST EU consumer price index
0930 BST UK house price index
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US housing starts
1030 EDT US EIA weekly petroleum status report
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Finland and Sweden on Wednesday handed in their bids to join the US-led alliance NATO, after Russia’s invasion of Ukraine up-ended decades of military non-alignment. ‘The applications you have made today are an historic step. Allies will now consider the next steps on your path to NATO,’ NATO chief Jens Stoltenberg said, after receiving the bids from the Finnish and Swedish ambassadors at the alliance’s headquarters. The membership push could represent the most significant expansion of NATO in decades, doubling its border with Russia, and President Vladimir Putin has warned it may trigger a response from Moscow. But the applications face resistance from NATO member Turkey, which has threatened to block them over accusations the Nordic neighbours act as safe havens for armed groups opposed to Ankara.
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BROKER RATING CHANGES
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RBC raises Reckitt Benckiser ’outperform’ (sector perform) - price target 7,000 (5,900) pence
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Jefferies raises Land Securities to ’hold’ (underperform) - price target 690 (620) pence
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BofA cuts Rolls-Royce price target to 80 (100) pence - ’underperform’ (Tuesday)
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COMPANIES - FTSE 100
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Luxury fashion retailer Burberry reported annual results in line with market expectations and has maintained its outlook for the year ahead. In the financial year that ended April 2, operating profit rose 4% to £543 million from £521 million. Adjusted operating profit jumped 32% year on year to £523 million from £396 million, matching company-compiled consensus. Revenue was up 21% to £2.83 billion from £2.34 billion, which was again in line with company-compiled consensus. Retail comparable store sales were up 18%, with full-price comparable store sales up 24%. Burberry declared an annual dividend of 47.0 pence, lifted 11% from 42.5p the prior year. Looking ahead, the fashion retailer maintained its guidance of high single-digit revenue growth.
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British Land outperformed analyst expectations in its annual results, with profit getting a boost from its ‘strong’ rent collection. Underlying profit in the year that ended March 31 rose 25% to £251 million from £201 million the year before. Company compiled consensus from 18 analysts had underlying profit reaching £230 million. Net tangible assets per share ended March 31 at 727 pence, rising from 648p, and was again ahead of expectations, which forecast a 703p figure. The firm’s rent collection hit 97% in the period, nearing pre-pandemic levels and allowed British Land to ‘significantly reduce provisions’. Chief Executive Simon Carter said: ‘Over the past year we have delivered a strong performance across all parts of our business as we continue to execute against our strategy. Our total accounting return for the year was 15% driven by a 6.8% increase in the valuation of our portfolio.’
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Credit checking firm Experian said it had a ‘very good year’ in the 12 months that ended March 31, as revenue rose by 17% to $6.29 billion from $5.37 billion, improving pretax profit by 34% to $1.45 billion from $1.08 billion. Experian raised its total dividend by 10% to 51.75 US cents from 47.00 cents. ‘For the year ahead, we expect organic revenue growth in the range of 7% to 9%, with modest margin improvement at constant exchange rates, supported by continuing investment behind the execution of our strategy,’ Chief Executive Officer Brian Cassin said.
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Anglo American reported a sharp rise in rough diamond sales due to strong consumer demand for diamond jewellery in the US. But the miner warned of the likely hit from the closure of many diamond polishing factories in India for holiday in the coming sales cycle. Rough diamond sales value for the provisional fourth sales cycle rose by 57% to $604 million from $385 million in the same cycle last year. Sales in the fourth cycle increased by 7.0% from $566 million in the third cycle. The provisional rough diamond sales figure for cycle four represents the expected sales value from May 2 to May 17. Actual third cycle sales value represents sales between March 8 and April 12.
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COMPANIES - FTSE 250
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Magazine publisher Future said it has made a modest upgrade to its guidance for financial year 2022, on the back of improving margins and the recent acquisition of digital-only women’s lifestyle publisher WhoWhatWear. In the half-year that ended March 31, Future recorded pretax profit of £81.0 million, up 42% from £56.9 million a year before, on a 48% rise in revenue to £404.3 million from £272.6 million. Adjusted operating margin widened to 33% in the first half from 32% in all of financial 2021. ‘Our strategy is underpinned by our diversified revenues, our global reach and the platform effect we generate,’ said Chief Executive Zillah Byng-Thorne.
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COMPANIES - GLOBAL
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Sony said it has brought forward its deadline for reaching carbon neutrality by a decade, saying it is now targeting net-zero emissions across its business by 2040. The Tokyo-based electronics and entertainment firm said the decision was taken ‘as climate change risks become more apparent and serious worldwide, and the transition to a decarbonised society has become an urgent issue’. Sony said it wants its own factories to be carbon neutral by 2030, also a decade earlier than its previous goal, and plans to reach that by increasing use of renewable power and energy-saving. Eliminating emissions from areas ‘such as products, supply chains, and logistics’, however, is to be achieved in part by investing in start-ups focused on carbon removal and projects that encourage carbon absorption with so-called augmented ecosystems, technology over which climate campaigners have raised doubts.
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Wednesday’s shareholder meetings
Abcam PLC - AGM
abrdn PLC - AGM in Edinburgh
Alliance Pharma PLC - AGM
Burford Capital Ltd - AGM
Coats Group PLC - AGM
CVC Credit Partners European Opportunities Ltd - AGM
EKF Diagnostics Holdings PLC - AGM
Highcroft Investments PLC - AGM
Impax Environmental Markets PLC - AGM
JPMorgan American Investment Trust PLC - AGM
Keller Group PLC - AGM
LMS Capital PLC - AGM
Merchants Trust PLC - AGM
PensionBee Group PLC - AGM
Permanent TSB Group Holdings PLC - AGM
PYX Resources Ltd - AGM
Riverstone Credit Opportunities Income PLC - AGM
Schroder UK Public Private Trust PLC - AGM
Science Group PLC - AGM
Seplat Energy PLC - AGM
TI Fluid Systems PLC - AGM
Vesuvius PLC - AGM
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