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FTSE 100 Live: Inflation jumps to 9% after energy bill hike, RPI at 11.1%

·9-min read
FTSE 100 Live: Inflation jumps to 9% after energy bill hike, RPI at 11.1%

Inflation today jumped to a 40-year high of 9% after cost of living pressures were fuelled by April’s big rise in energy bills.

The annual rate of CPI inflation compared with 7% the previous month, while the retail prices index that’s still used in some price calculations soared from 9% to 11.1%.

The figures, which were in line with City expectations, increase the pressure on the Bank of England to hike interest rates for a fifth time in a row when policymakers meet next month.

Read more on today’s inflation figures

FTSE 100 Live Wednesday

  • Inflation jumps to 40-year high of 9%

  • Burberry focused on China recovery

  • FTSE flat, Premier Foods higher after results

Watches of Switzerland insulated from cost of living squeeze

14:28 , Oscar Williams-Grut

Britain is facing the worst cost of living crisis in a generation but not all of us are feeling the squeeze equally: the super-rich still have enough cash in the bank to acquire Patek Philippe and Rolex watches, giving a boost to Watches of Switzerland.

The luxury watch dealer said today it is still seeing bumper demand for high-end timepieces despite rising interest rates and inflation, and diving stock prices.

Watches of Switzerland’s sales jumped by 40% to £1.2 billion in the 52 weeks to the start of May. Sales have remained strong this year despite the outbreak of war in Ukraine and growing fears of recession in the UK and US.

Read the full story.

More rate rises on the horizon after inflation print

12:20 , Simon English

There will be at least four more interest rate rises this year and a surge of insolvencies as inflation takes its toll on an increasingly shaky UK economy.

That’s the latest City betting on the day inflation went to a 40% year high, jumping from 7% to 9% for the year to April.

In response Bank of America told clients to expect interest rates to double from 1%. The Bank of England will now raise rates by 0.25 percentage points in June, August, September and November.

There could be more rate rises than that. “In our view the risks to our Bank Rate call are skewed up,” it said in a note.

Read the full story.

Burberry upbeat despite China lockdowns

11:46 , Oscar Williams-Grut

Burberry has downplayed fears that the resurgence of Covid-19 in China will dent sales, standing by its forecasts despite recent lockdowns.

The British luxury fashion brand today reported a 23% rise in full year revenue to £2.83 billion, mainly driven by the post-pandemic sales in Europe and US. China dragged on performance as lockdowns were reintroduced, with sales down 13% in the fourth quarter.

Burberry admitted that its fortunes this year will be “dependent on the impact of COVID-19 and rate of recovery in consumer spending in Mainland China.”

Chief financial officer Julie Brown put on a brave face, saying: “We’re always prepared for an upside case and we’re always prepared for a rebound and, actually, in China we do find that recovery is very strong when it comes.”

Read the full story.

Investor rebellion over pay at Greggs

10:34 , Mark Banham

Greggs has faced a shareholder rebellion against its CEO’s “excessive” pay deal.

14.3% of votes at yesterday’s AGM went against the company’s pay report.

Under the plans, chief executive Roger Whiteside, who retires early next year, is in line for a total package of £1.9 million including benefits.

Ahead of the AGM, shareholder advisory group PIRC branded the pay deal “excessive”. Glass Lewis, another advisory group, also raised questions about the remuneration report.

Earlier this week Greggs announced a 27.4% increase in sales in the first 19 weeks of the year.

FTSE 100 flat, Premier Foods rises after strong year

10:32 , Graeme Evans

A record year at Mr Kipling sweetened shares for Premier Foods today as the owner of some of Britain’s best known brands continues to weather inflation headwinds.

FTSE 250-listed Premier, which is also behind Bisto, Ambrosia, Sharwood’s, posted an 11% rise in annual profits to £128.5 million after the trading boost for its sweet treats division. It also reported a resilient performance over recent weeks.

Shares rose 6% as Premier backed cost efficiencies and increased prices to offset current inflation pressures, while it is planning new product launches to support growth.

The pulling power of brands like Mr Kipling has so far kept customers loyal and the value proposition of its sauces for quick meals has also appealed amid the cost of living crisis.

However, Hargreaves Lansdown analyst Susannah Streeter questions how long companies like Premier will be able to protect margins. She added: “With fresh price hikes on the way, there will be concern that shoppers might be forced to replace shopping basket favourites with even cheaper products from rivals.”

Premier’s rise of 6.2p to 112.8p was one of several strong performances in the FTSE 250, with industrial threads firm Coats, engineer Vesuvius, housebuilder Vistry and van hire business Redde Northgate among those 3% higher after updates.

The FTSE 250 index gained 47.85 points to 20,113.44, but holidays giant TUI fell 11% after last night placing new shares in a fundraising aimed at repaying the state aid it received during the pandemic. Cyber security firm Darktrace also continued its recent rollercoaster ride by falling 13% or 48.5p to 332.5p.

The FTSE 100 index is down by less than one point at 7517.57, supported by gains of more than 1% for BP and Shell and for Royal Mail ahead of tomorrow’s annual results.

Credit checking firm Experian was the biggest faller after the publication of annual results.

It forecast organic revenues growth in the range of 7-9% for this year, but shares fell 94p to 2575p as the guidance compared with City hopes for about 8.5%.

British Land bullish on London investments

09:46 , Oscar Williams-Grut

British Land is expecting to reap big profits from its investments in London, predicting a £2 billion windfall from its redevelopment of Canada Water and investment in warehouse space in the capital in the coming years.

CEO Simon Carter said the property giant saw “a wealth of development opportunities” in London as he gave the £2 billion figure.

British Land is focusing on “urban logistics” in the capital, with investments in warehouse space for next day delivery of online shopping, dark kitchens for takeaway apps and storage for “quick commerce” grocers that promise delivery of food and drink in as little as 10 minutes.

The forecast came as British Land announced a jump in annual profits.

FTSE 100 flat, Experian falls 3%

09:08 , Graeme Evans

The FTSE 100 index stood 4.74 points lower at 7513, with credit checking firm Experian the biggest faller on the back of annual results.

Experian forecast organic revenues growth in the range of 7-9% for this year, but shares fell 3% or 78p to 2591p as the guidance compared with City hopes for about 8.5%.

Gaming group Entain led the risers after improving 3%, while retail and office landlord British Land was 1% higher following annual results.

The FTSE 250 index rallied 51.64 points to 20,117.23, aided by a positive reception to corporate updates. Mr Kipling to Sharwood’s firm Premier Foods led the way, up 4% or 4.8p to 111.4p after its annual figures came in ahead of guidance given in January.

Industrial threads firm Coats, engineer Vesuvius, housebuilder Vistry and van hire business Redde Northgate were all 3% higher after their updates.

Burberry focused on China consumer recovery

08:18 , Graeme Evans

Burberry today stuck by its sales forecasts for this year, but warned that its performance is dependent on the impact of Covid-19 and the rate of recovery in consumer spending in mainland China.

Full year revenues for the 53 weeks ended 2 April increased 10% with adjusted operating profit up 38% to £523 million.

The luxury goods group added: “While the current macroeconomic environment creates some near term uncertainty, we are actively managing the headwind from inflation.”

New chief executive Jonathan Akeroyd will lay out his plans for “accelerating growth” alongside interim results in November.

He said today: “The company has made great progress over the last five years to elevate the brand, product and customer experience into the luxury space.”

The shares were today 1.5% or 25p higher at 1608.5p, having dropped by 24% over the last year amid concerns over lockdowns in China.

Richard Hunter, head of markets at Interactive Investor, said: “Burberry is clearly making progress on its ambitious strategy and there are some factors such as the full return of the tourist which should provide some serious tailwinds in due course.

“In the meantime, however, it seems that investors are not yet fully committed to the recovery story, and the market consensus of the shares as a hold reflects the challenges which are yet to be overcome.”

Inflation heading to 10% as utility bills surge

07:57 , Graeme Evans

Around three-quarters of this month’s increase in the annual inflation rate came from utility bills, according to the Office for National Statistics (ONS).

It also reported further steep annual rises in the cost of metals, chemicals and crude oils, along with higher prices for goods leaving factory gates.

On a monthly basis, the consumer prices index (CPI) rose by 2.5% in April compared with 0.6% the previous year after Ofgem’s 54% hike in the energy price cap.

The Bank of England has already warned that it expects inflation to peak at 10% later this year, adding to pressure on policymakers to keep on raising interest rates.

Today’s CPI figure is the highest in the series, which began in January 1997. However, modelling by the ONS suggests that CPI would last have been higher sometime around 1982.

US markets strengthen after retail sales lift

07:22 , Graeme Evans

US markets rebounded yesterday after a solid retail sales report for April allayed some of the fears about the impact of rising prices on consumer confidence.

The month-on-month growth of 0.9% was in line with Wall Street expectations and followed an upwardly revised figure for March of 1.4%.

The Nasdaq jumped more than 2.5% and the S&P 500 rose 2% after a stronger session for some of the largest tech sector names, including Apple and Amazon after gains of 2.5% and 4% respectively.

Their rise came as Federal Reserve chairman Jerome Powell said the central bank had “both the tools and the resolve to get inflation back down”.

The Fed hiked interest rates by the largest amount since 2000 in May and is set to do the same next month and at the following meeting.

US futures are pointing to a flat start later, while the CMC Markets has called the FTSE 100 index to open four points lower at 7514. The top fight rose 53.5 points yesterday.

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