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(Alliance News) - UK consumer price inflation slowed in July, data from the Office of National Statistics showed Wednesday.
The consumer prices index was unchanged in July versus the previous month, following June's 0.5% rise from May. Market consensus, according to FXStreet, had predicted consumer prices to rise 0.3% in July from June.
"In 2021, price rises in transport were largely offset by price falls for clothing and footwear, and a variety of recreational good," the ONS explained.
Annually, the CPI rose by 2.0% in July, slowing from 2.5% to June, and behind the 2.2% rise predicted by the market according to FXStreet.
The CPI including owner occupiers' housing costs rose by 2.1% in the 12 months to July 2021, easing from 2.4% in the 12 months to June. On a monthly basis, the CPIH was unchanged in July, following 0.4% growth in June from May.
Separately, the ONS also reported the headline rate of output prices showed positive growth of 4.9% on the year to July, picking up from 4.5% in June - which is the highest the annual rate of output inflation has been since December 2011, the ONS noted. On a monthly basis, output producer price inflation rose 0.6%, the same monthly pace as in June.
The headline rate of input prices showed positive growth of 9.9% on the year to July, up from 9.7% in June. Input PPI rose 0.8% in July on the month before compared to June's 0.5% monthly growth.
Ruth Gregory, senior UK economist at Capital Economics, said last month's easing of inflation pressure will not last.
"July's drop in CPI inflation is likely to be followed by sharp rises in the next few months, taking inflation to a peak of about 4.5%," Gregory said. "But provided higher inflation does not feed through into higher inflation expectations or persistently faster pay growth, we do not think that the Bank of England will respond next year by tightening monetary policy."
Capital Economics expects UK inflation to fall back to 1.5% by the end of 2022.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,186.04
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Hang Seng: up 0.4% at 25,836.41
Nikkei 225: closed up 0.6% at 27,585.91
DJIA: closed down 282.12 points, or 0.8%, at 35,343.28
S&P 500: closed down 31.63 points, or 0.7%, at 4,448.08
Nasdaq Composite: closed down 137.58 points, or 0.9%, at 14,656.18
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EUR: firm at USD1.1721 (USD1.1715)
GBP: firm at USD1.3750 (USD1.3742)
USD: flat at JPY109.59 (JPY109.60)
Gold: up at USD1,793.00 per ounce (USD1,783.45)
Oil (Brent): up at USD69.90 a barrel (USD69.75)
(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
1100 CEST EU construction output
0930 BST UK house price index
0930 BST UK Treasury economic forecasts
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US housing starts
1030 EDT US EIA weekly petroleum status report
1400 EDT US Federal Open Market Committee meeting minutes
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US President Joe Biden and UK Prime Minister Boris Johnson discussed Afghanistan on Tuesday and announced a virtual summit of the G7 leaders on the crisis, the White House said. "They agreed to hold a virtual G7 leaders' meeting next week to discuss a common strategy and approach," the White House said in a statement. This was the first phone call between Biden and a foreign leader since the startling weekend takeover by the Taliban of Kabul, prompting a panicky operation to withdraw final US and allied personnel from the city's airport. The sudden Taliban victory has sparked fears of a large-scale humanitarian crisis both in Afghanistan and possibly involving waves of refugees seeking asylum abroad, including in western Europe. Biden – widely criticized for the lack of preparation in getting thousands of people airlifted to safety – and Johnson "discussed the need for continued close coordination among allies and democratic partners on Afghanistan policy going forward," the statement said.
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Iran has expanded the production of nearly weapons grade uranium, international inspectors said. The International Atomic Energy Agency said the Islamic Republic has begun enriching uranium to a purity of 60% at a second production unit that came online at its Natanz nuclear facility. Ninety percent is considered weapons-grade. According to the 2015 nuclear agreement between Iran and a group of world powers, enrichment must stay below 4%. Tehran has been flouting the limit, arguing it needs a highly purified form for medical purposes.
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BROKER RATING CHANGES
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JEFFERIES RAISES PERSIMMON PRICE TARGET TO 3,690 (3,677) PENCE - 'BUY'
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RBC CUTS BHP GROUP PRICE TARGET TO 2,300 (2,400) PENCE - 'OUTPERFORM'
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BERENBERG RAISES FUTURE PLC PRICE TARGET TO 4,890 (4,180) PENCE - 'BUY'
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COMPANIES - FTSE 100
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Housebuilder Persimmon said it saw a "robust" first half. In the six months to June 30, pretax profit surged to GBP480.1 million from GBP292.4 million a year before, as revenue grew to GBP1.84 billion from GBP1.19 billion. This came as Persimmon's new home completions almost doubled to 7,406 from 4,900 and its new home average selling price increased to GBP236,199 from GBP225.066. "We anticipate successfully delivering about 10% growth in sales completions this year. The group has a great platform and good momentum to deliver further disciplined growth into the medium term, creating value for all," Chief Executive Dean Finch said. The housebuilder's current forward sales position, at June 30, was GBP2.23 billion, down from GBP2.48 billion at the same point a year before.
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COMPANIES - FTSE 250
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Construction firm Balfour Beatty reiterated its 2021 outlook as it returned to profit. In the half-year ended July 2, pretax profit was GBP35 million, compared to a GBP26 million loss a year before. Revenue increased slightly to GBP4.15 billion from GBP4.12 billion. Balfour declared an interim dividend of 3.0 pence, after withholding its shareholder payout last amid amid its loss-making, but noted the dividend is up 43% from the 2019 level. Looking ahead, the company reiterated its 2021 profit from operations outlook for earnings-based businesses to be in line with 2019. Balfour ended the first half with an order book of GBP16.1 billion, down from GBP17.5 billion 12 months earlier and lower than the GBP16.4 billion seen six months prior.
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AJ Bell made a series of senior management changes, promoting Chief Financial Officer Michael Summersgill to the newly created role of deputy chief executive officer. "Michael has held the position of chief financial officer since 2011 and is currently responsible for the company's finance and operations functions. In his new role, Michael will support CEO Andy Bell with the development and execution of the company's strategy to drive the future growth of AJ Bell's platform propositions," AJ Bell explained. The investment platform also named current Finance Director Roger Stott to the newly created role of chief operating officer. As a result of these moves, AJ Bell is currently conducting an external search for a new CFO.
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Hochschild Mining said it was able to make "good progress" in the first half, as revenue exploded on a jump in gold and silver production. In the six months to June 30, pretax profit surged to USD83.8 million from USD6.5 million a year before, thanks in part to the non-repetition of USD20.2 million in administrative expenses and USD12.7 million in exploration expenses. Revenue grew sharply to USD394.8 million from USD232.0 million. Attributable gold produced rose 34% year on year to 106,000 ounces, while attributable silver production was up 44% to 5.9 million ounces. Looking ahead, Hochschild said it is on track to deliver its overall 2021 production target of 360,000 to 372,000 gold equivalent ounces and 31.0 to 32.0 million silver equivalent ounces.
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COMPANIES - GLOBAL
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Woodside Petroleum said earnings doubled in a strong first half, as it now looks towards an agreed merger with BHP's oil and gas portfolio. In the six months to June 30, the energy firm posted a pretax profit of USD503 million, swinging from a USD5.37 billion loss. Perth, Australia-based Woodside said operating revenue grew by 31% to USD2.50 billion from USD1.91 billion a year previously. The revenue improvement was partly due to higher sales volumes, with gas sales up 8.1% to 45.5 million barrels of oil equivalent. However, half-year production fell 8% to 46.3 million barrels of oil equivalent. Woodside's interim results announcement comes a day after it unveiled plans to merge its oil and gas portfolio with mining company BHP, creating one of the ten largest independent energy producers in the world and the largest listed in Sydney.
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CSL reported a rise in sales in its recent financial year, as the biotechnology firm vowed to continue focusing on research and development after the pandemic. The Melbourne, Australia-based company, which develops medicines to treat and prevent serious human medical conditions, booked pretax profit of USD2.93 billion in the 12 months that ended June 30, up 15% year-on-year from USD2.57 billion. Revenue totalled USD10.31 billion, up 13% from USD9.15 billion last year. Sales and service revenue rose 13% to USD9.98 billion from USD8.76 billion. CSL worked alongside AstraZeneca to manufacture around 50.0 million doses of the Oxford University/AstraZeneca Covid-19 vaccine for Australia.
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Wednesday's Shareholder Meetings
Ariana Resources PLC - AGM
Asimilar Group PLC - AGM
Playtech PLC - GM re sale of Finalto
Rambler Metals & Mining PLC - GM re conversion share allotment
SIMEC Atlantis Energy Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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