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(Alliance News) - The annual UK inflation rate eased a touch last month, data showed on Wednesday, but still remains above the Bank of England's 2% target.
The consumer price index rose 3.1% year-on-year in September, slowing from August's 3.2% growth. Analysts had been expecting the September reading to remain stable at 3.2%, according to FXStreet.
Month-on-month, prices rose 0.3%, again slowing from August's 0.7% rise.
"Annual inflation fell back a little in September due to the unwinding effect of last year's 'Eat Out to Help Out', which was a factor in pushing up the rate in August," said Mike Hardie, Head of Prices at the Office for National Statistics.
"However, this was partially offset by most other categories, including price rises for furniture and household goods and food prices falling more slowly than this time last year."
The data comes after recent comments from Bank of England Governor Andrew Bailey that the UK central bank will have to act to ease inflationary pressures - leading to warnings from economists that the BoE could raise rates as soon as next month.
"That's why we, at the Bank of England, have signalled, and this is another such signal, that we will have to act," Bailey said, according to the Financial Times. "But of course that action comes in our monetary policy meetings."
A separate release from the ONS on Wednesday showed producer price growth picked up in September. Output prices rose 6.7% on the year to September, accelerating from 6.0% in August. Input price growth also ticked up, to 11.4% from 11.2%.
Lloyds Bank commented that the easing of price pressure in the UK won't last. "We predicted a fall to 3.0% year-on-year. It will be a temporary respite from the march up to and potentially beyond 4% in the coming months. The increase in the energy price cap will pull inflation higher in October, with a further significant rise likely next April as a result of soaring wholesale gas prices," Lloyds said.
"That means that inflation seems set to remain around 4% into the second quarter of next year. It will present the [Monetary Policy Committee of the Bank of England] with a difficult policy trade-off between supporting the economy and tackling inflation."
Added Laith Khalaf, head of investment analysis at AJ Bell, about BoE policymakers: "It could take a bit longer for the requisite number of doves to sheepishly convert into hawks. This latest moderation in inflation will also pour cold water on the case for immediately tighter monetary policy."
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 7,210.30
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Hang Seng: up 1.1% at 26,071.34
Nikkei 225: closed up 0.1% at 29,255.55
DJIA: closed up 198.70 points, or 0.6%, at 35,457.31
S&P 500: closed up 33.17 points, or 0.7%, at 4,519.63
Nasdaq Composite: closed up 107.28 points, or 0.7%, at 15,129.09
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EUR: flat at USD1.1639 (USD1.1640)
GBP: down at USD1.3782 (USD1.3800)
USD: up at JPY114.49 (JPY114.23)
Gold: up at USD1,776.09 per ounce (USD1,772.17)
Oil (Brent): soft at USD84.47 a barrel (USD84.64)
(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
1000 CEST EU euro area balance of payments
1100 CEST EU consumer price index
0700 EDT US MBA weekly mortgage applications survey
1030 EDT US EIA weekly petroleum status report
1400 EDT US Beige Book
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US President Joe Biden was "more confident" about saving his multi-trillion-dollar agenda in Congress from internal party wrangling, the White House press secretary said late Tuesday, after a day of intensive negotiations with Democrats. At stake are two huge bills: an infrastructure package worth USD1.2 trillion and a second, even bigger proposal to expand the social safety net. "After a day of constructive meetings, the president is more confident this evening about the path forward," said spokeswoman Jen Psaki. "There was broad agreement that there is urgency in moving forward over the next several days and that the window for finalizing a package is closing," she added.
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China's new-home prices fell for the first time in six years last month, data showed on Wednesday, as the property sector struggles after a government clampdown, while a default at several major developers added to contagion concerns from the Evergerande crisis. The latest reading follows official figures showing the real estate and construction industries shrank in the third quarter for the first time since the early stage of the pandemic, which acted as a huge drag on the world's number two economy. Figures on Wednesday showed that the cost of new homes in 70 large and medium-sized cities saw a small decrease in September, the National Bureau of Statistics said without giving a precise percentage, though Bloomberg calculations found they dropped by around 0.1%. That represents the first drop since April 2015. Prices in the secondary market slipped 0.2%, a second monthly fall, Bloomberg said.
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North Korea confirmed a rocket test a day earlier, saying it had tested a submarine-launched ballistic missile. North Korean state news agency KCNA reported Pyongyang test-launched a "new type" of rocket which it said would help enhance the country's defence technology and the navy's underwater operational capability. Photos published by KCNA showed a small rocket with a presumably small range. This, paired with the absence of leader Kim Jong Un at the launch, is why experts do not consider the test a groundbreaking development for North Korea's missile programme.
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BROKER RATING CHANGES
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UBS CUTS PEARSON PRICE TARGET TO 620 (800) PENCE - 'NEUTRAL'
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BERENBERG RAISES MONEYSUPERMARKET.COM TO 'BUY' (HOLD) - PRICE TARGET 275 (310) PENCE
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LIBERUM CUTS YOUGOV TO 'HOLD' ('BUY') - TARGET 1300 PENCE
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COMPANIES - FTSE 100
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British luxury fashion brand Burberry has found a replacement for Chief Executive Marco Gobbetti in the form of ex-Alexander McQueen boss Jonathan Akeroyd. Akeroyd, currently CEO of Milan-based Gianni Versace, will join Burberry to take up the same role on April 1, 2022. In his time at Versace, he has "reorganised and accelerated growth at the iconic Italian fashion house", Burberry said. He was previously CEO of British luxury brand Alexander McQueen. Gobbetti will leave Burberry at the end of 2021, and Gerry Murphy will chair the executive committee from this date until Akeroyd arrives.
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Chilean miner Antofagasta backed its 2021 copper production guidance, but warned output is set to dip next year. Copper output in the third quarter was 181,100 tonnes, 1.5% higher than in the previous quarter on higher production at Centinela, partly offset by lower throughput at Los Pelambres. Cash costs before by-product credits in the third quarter were USD1.79 per pound, being 2 cents higher than the second quarter as the energy crisis pushed up input prices. For the full-year, guidance for copper production of 710,000 to 740,000 tonnes was unchanged. For 2022 however, Antofagasta now expects output of 660,000 to 690,000 tonnes.
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Cybersecurity firm Avast backed its outlook after third-quarter growth. Revenue for the third quarter of 2021 rose 3.0% to USD232.7 million, and was up 5.6% on an organic basis. Adjusted earnings before interest, tax, depreciation and amortisation edged up 0.8% to USD127.0 million. "Billings growth accelerated through the quarter, and we expect H2 billings growth of mid to high single digits," the company said. Avast reaffirmed its full-year outlook for revenue to be at the upper end of 6% to 8% growth, and a broadly flat adjusted Ebitda margin percentage. Avast didn't comment on its impending acquisition by the US's NortonLifelock other than to say that its forecast doesn't include transaction costs or accounting impacts of the merger.
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COMPANIES - MAIN MARKET AND AIM
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Deliveroo raised its outlook following a "strong" third quarter performance despite the lifting of most remaining coronavirus restrictions in the UK during the period. The food delivery firm reported annual growth in gross transaction value of 54% in the third quarter of 2021 at GBP1.59 billion, describing orders as "resilient" despite lockdown restrictions being eased in the UK. It did note a "modest" reduction in average order value, with this slipping 6% year-on-year to GBP21.4 from GBP22.8. On the back of this, Deliveroo raised its full-year gross transaction value guidance to growth of 60% to 70%, versus prior guidance of 50% to 60%. Its margin outlook was unchanged, seen in a range of 7.50% to 7.75%. "While we are mindful of current and potential macroeconomic disruptions and uncertainties, we expect further strong performance in the remainder of the year and we are increasing our full-year GTV growth guidance," said Founder & Chief Executive Will Shu.
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COMPANIES - GLOBAL
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Roche raised its full-year guidance as the pharmaceutical firm benefited from persistent high demand for the use of its coronavirus testing kits. The Basel, Switzerland-based company reported sales for the first nine months of the year ended September 30 of CHF46.68 billion, up 8% year-on-year from CHF43.98 billion. In the Diagnostics Division, sales grew 18% in the third quarter and 39% in the first nine months due to high demand for Covid-19 tests, a strong recovery in the base business, and Roche's newly launched diagnostics platforms.
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Wednesday's Shareholder Meetings
Byotrol PLC - AGM
Diverse Income Trust PLC - AGM
Norish PLC - EGM re cold storage division sale
Real Good Food PLC - AGM re delisting from AIM
Summerway Capital PLC - GM re change to investment policy
Tufton Oceanic Assets Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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