The consumer prices index dipped to 2.5 per cent in the year to December amidst falling hotel prices, according to the Office for National Statistics.
Among the companies with reports and trading updates today are Serco, Fuller’s, Currys, Hays, Vistry Group, and Frontier Developments.
Inflation drop ‘will be very welcome for the government’
Nicholas Hyett, investment manager at Wealth Club, comments on the latest fall in inflation:
The slowdown will be very welcome for the government. It increases the scope for the Bank of England to cut interest rates, boosting growth and lowering the cost of borrowing.
That would create a little more financial headroom for the Chancellor and reduce the need for substantial cuts to public spending.
However, we think there’s a significant risk that inflation kicks off again later in the year. Employers are set to start paying higher rates of National Insurance in April, pushing up labour costs.
That is likely to see prices rise in sectors like hospitality and retail that employ substantial numbers of people and wear margins are already pretty thin.
That risks sparking an inflationary spiral. It could be a tense few months as we wait and see how things play out.
US hedge fund Saba brands London trusts ‘a disaster’
The boss of the US hedge fund battling to win control of seven London-listed investment trusts has branded the sector a ‘disaster’ – and claims he is the ‘white knight’ needed to save it.
Saba Capital boss Boaz Weinstein said shareholders have lost out due to an ‘ecosystem of greed’ that has damaged the performance of UK trusts. He hit back at the mounting opposition to his plans to overhaul the trusts and replace their directors with his allies.
Inflation marginally falls
‘December’s dip in inflation won’t last long’
Thomas Pugh, economist at RSM UK, comments on the latest UK inflation figures:
December’s dip in inflation won’t last long. The combination of firms passing through the large increase in labour costs imposed by the budget, increases in taxes and rising energy prices means inflation will breach 3% in the Spring, forcing Governor Bailey to pen his first letter to Rachel Reeves.
The tick down in inflation in December does raise the chances of a rate cut in February, but rising inflation this year means the Bank of England will cut rates cautiously.
Inflation rate drops from 2.6% to 2.5%
Embattled Rachel Reeves was offered a surprise respite today as inflation unexpectedly dipped.
The headline CPI rate slid to 2.5 per cent in December from 2.6 per cent the previous month, with core inflation also slowing.
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BUSINESS LIVE: Inflation falls to 2.5%; Serco wins $247m contract; Fuller’s enjoys strong Christmas
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