Last checked at 
(Alliance News) - Consumer price inflation in the UK shot up to the highest level for a decade in October, data from the Office for National Statistics showed on Wednesday.
The annual UK inflation rate surged to 4.2% in October from just 3.1% in September. Consensus, according to FXStreet, had been anticipating a figure of 3.9%.
This was the highest 12-month inflation rate since November 2011, when it was 4.8%. The Bank of England recently warned inflation could peak at around 5% in April next year.
"This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cares and fuel as well as higher prices in restaurants and hotels," said Grant Fitzner, chief economist at the ONS, said of the latest data.
The 'housing, water, electricity, gas and other fuels' category posted a 6.8% annual price hike for October, mainly driven by energy prices. Meanwhile, the price of second hand cars jumped by 23%.
Core consumer prices rose by 3.4% on a year before.
Month-on-month, UK consumer prices increased 1.1% in October, rising 0.7% on a core basis.
Prices also continued to increase at factories. Output producer price growth for October was 8.0% annually, ticking up from 7.0% in September, while input prices rose 13% after a 12% advance the month before.
Fitzner added: "Cost of goods produced by factories and the price of raw materials have also risen substantially, and are now at their highest rates for at least 10 years."
Commented Richard Carter, head of fixed interest research at Quilter Cheviot: "This morning's print suggests we should be braced for a showdown at the next [Monetary Policy Committee] meeting in December, where all bets will be on a rate hike. Particularly given we now have more information on the state of the labour market in the UK, which seems to be transitioning from the end of the furlough scheme well."
However, Dan Boardman-Weston, chief investment officer at BRI Wealth Management, said the UK central bank should be cautious in raising interest rates too aggressively in response to the latest inflation reading.
"Nothing we see leads us to believe that this inflation is permanent and as we start heading into spring next year the figures will start falling rapidly," he said. "The Bank of England needs to be careful that they’re not too hasty in tightening monetary policy as a policy misstep could do more harm to the economy than this transitory inflation we are witnessing."
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.1% at 7,318.84
----------
Hang Seng: down 0.3% at 25,650.08
Nikkei 225: closed down 0.4% at 29,688.33
DJIA: closed up 54.77 points, or 0.2%, at 36,142.22
S&P 500: closed up 18.10 points, or 0.4%, at 4,700.90
Nasdaq Composite: closed up 120.01 points, or 0.8%, at 15,973.86
----------
EUR: down at USD1.1309 (USD1.1347)
GBP: up at USD1.3458 (USD1.3430)
USD: up at JPY114.87 (JPY114.50)
Gold: soft at USD1,856.92 per ounce (USD1,858.07)
Oil (Brent): soft at USD81.81 a barrel (USD82.00)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Wednesday's Key Economic Events still to come
1000 CET EU ECB financial stability review
1100 CET EU consumer price index
1100 CET EU construction output
0930 GMT UK house price index
0700 EST US MBA weekly mortgage applications survey
0830 EST US housing starts
1030 EST US EIA weekly petroleum status report
----------
Exports from Japan continued to rise in October amid continued high foreign demand but fell short of forecasts and the gains seen the month before, according to official figures, leaving the country with a trade deficit. Exports rose by 9.4% annually to JPY7.184 trillion, about USD63 billion, from JPY6.565 trillion, slowing from 13% growth in September and below consensus market forecasts of 9.9% according to FXStreet. Despite a weakening increase in overseas sales, October was the eighth straight month of annual growth for Japan. Imports surged 27% to JPY7.251 trillion in October from JPY5.724 trillion a year earlier. Growth slowed from a 39% jump in September in what was the ninth consecutive month of import gains. As a result, Japan recorded a trade deficit of JPY67.37 billion in October, swung from a JPY840.80 billion surplus a year ago. However, the trade gap was reduced substantially from JPY622.76 billion in September.
----------
BROKER RATING CHANGES
----------
JEFFERIES CUTS MARKS & SPENCER TO 'HOLD' (BUY) - PRICE TARGET 250 (220) PENCE
----------
COMPANIES - FTSE 100
----------
Power utility SSE confirmed a Bloomberg report that it plans to sell electricity network interests to fund investment in its renewables arm. Setting out its 'net zero acceleration programme' alongside its interim results, SSE said it plans an additional GBP1 billion per year in capital expenditure on renewables, fully funded from the sale of minority interests in its Transmission and Distribution arms. SSE also said Wednesday it will rebase its dividend to 60 pence per share in financial 2024 with an "attractive" yearly rise of at least 5% to March 2026.
----------
Glencore is set to receive AUD1 billion, around USD730 million, from the sale of its Ernest Henry Mining copper-gold mine in Queensland, Australia. The sale is being made to Evolution, a local Australian company which has worked with Glencore over the past five years at Ernest Henry. Evolution will assume full ownership and operational control of the mine and will enter into a copper concentrate offtake agreement and separate ore tolling agreement with Glencore. Of the consideration, AUD800 million is due when the deal closes and the remaining AUD200 million 12 months after closing.
----------
Spirax-Sarco Engineering said it continues to see strong demand but it is "not immune" to global supply chain disruptions. Order books across all three of its businesses expanded in the four months to the end of October, above its expectations. However, the industrial engineering firm cautioned: "Although we have a diversified and resilient supply chain, we are not immune to current disruptions being experienced globally and across all sectors. While all three businesses were somewhat impacted by shipment delays, the effects have been greater within Watson-Marlow and Electric Thermal Solutions." Rising material and freight costs are being broadly offset by "internal efficiencies and price management practices". Spirax-Sarco added that it has seen foreign exchange headwinds, and if current exchange rates were to persist for the remainder of the year, it expects close to a 4% hit to full-year sales and profit compared with 2020.
----------
Accounting software firm Sage posted a fall in profit but said it sees organic recurring sales growth accelerating in the year ahead while margins should improve. Full-year revenue fell 3% to GBP1.85 billion. However, organic recurring revenue grew 5% to GBP1.64 billion, which Sage said was underpinned by Sage Business Cloud growth of 19%. Pretax profit for the financial year, which ended September 30, dipped to GBP347 million from GBP373 million. Looking ahead, Sage expects organic recurring revenue growth to accelerate in its new financial year, seen in the region of 8% to 9%. Organic operating margin is "expected to trend upwards in FY22 and beyond", after dipping 2.7 percentage points to 19.3% in the recently ended financial year.
----------
COMPANIES - FTSE 250
----------
Tyman warned that while positive trading momentum has continued into the second half, full-year profit is now expected below consensus due to supply-chain challenges for the supplier of door and window components. Revenue was up 12% to GBP529 million in the ten months to October 31 on a reported annual basis and by 19% on a like-for-like one. Compared with 2019, like-for-like revenue was up 8%. However, Tyman warned: "As indicated at the time of the interim results in July, strong market demand and market share gains have continued despite global supply chain challenges, notably material and labour availability, as well as global freight disruption. The group now expects that full year adjusted operating profit will be marginally below consensus." Tyman placed consensus at GBP91.5 million.
----------
There was a guidance upgrade from self-storage firm Safestore after a "record breaking year". Fourth quarter revenue was up 19% year-on-year to GBP51.1 million and year-to-date revenue 15% higher at GBP186.8 million. Earnings for the year ended October 31 are now seen slightly ahead of previous guidance of 39.5p to 40p of adjusted diluted EPRA earnings per share.
----------
CMC Markets reported half-year results that were well down from last year but still much higher than before the pandemic. The online trading platform cut its interim dividend by 62% to 3.50 pence from 9.20p a year ago, but this still was up 23% from 2.85p in 2019. Similarly, pretax profit fell by 74% to GBP36.0 million in the six months that ended September 30 from GBP141.1 million a year before but was up 20% on 2019. CMC confirmed previous full-year guidance. Chief Executive Officer Peter Cruddas said CMC is "on a fast track to diversification" but otherwise gave no new information about the company's review of splitting the business into leveraged and non-leveraged products.
----------
COMPANIES - GLOBAL
----------
Chinese gaming firm NetEase has revived plans to list its music streaming company in Hong Kong after it was initially shelved in the wake of Beijing's regulatory crackdown on big tech firms. Cloud Village is one of China's most popular music apps alongside a similar service provided by rival Tencent, which dominates the market. NetEase refiled a preliminary prospectus with the Hong Kong stock exchange late Tuesday signalling plans to list Cloud Village, though it did not say when the listing would take place. Bloomberg News said NetEase was hoping to raise about USD500 million, around half what it had initially hoped its initial public offering plans were first announced earlier this year. Those proposals were scrapped in August as China unveiled a dizzying array of measures against major tech companies that hammered their share prices and knocked investor confidence in the sector.
----------
Wednesday's Shareholder Meetings
AMTE Power PLC - AGM
Berkeley Energia Ltd - AGM
BMO Real Estate Investments Ltd - AGM
Caribbean Investment Holdings Ltd - GM re delisting from AIM
Celtic PLC - AGM
Henderson Eurotrust PLC - AGM
Ncondezi Energy Ltd - AGM
Pacific Horizon Investment Trust PLC - AGM
Picton Property Income Ltd - AGM
Rainbow Rare Earths Ltd - AGM
Smiths Group PLC - AGM
Smiths Group PLC - GM re sale of Smiths Medical
----------
By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
