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Pound extends record losses against euro as Brexit crisis builds - business live Energy bills and air fares drive UK inflation up, as pound slides - business live
(32 minutes later)
Beer and tobacco prices fell last month, the ONS adds:
Prices for cigarettes overall fell by 0.6% between March and April 2019 compared with a rise of 1.4% between the same two months a year ago.
Prices for beer, particularly larger packs of canned lager, also had a small downward contribution, although this was partially offset by spirits, which rose in price between March and April 2019 by more than a year ago.
Consumers were hit by a 10% jump in electricity costs last month, today’s inflation report shows.
That’s MUCH more than the rise in wholesale prices -- as energy firms responded to Ofgem’s decision to lift the cap on bills.
Consumer prices for electricity rose by almost 11% between March and April 2019, while input producer prices for electricity rose by around 2% over the same period.
Wholesale electricity prices are only available until December 2018 but rose by around 3% between November and December 2018, and rose considerably faster than producer and consumer electricity prices between June 2017 and September 2018.
Consumer prices reflect more than just wholesale prices as they also include the cost of transmission, distribution and regulatory costs, as well as profits for energy suppliers and others in the supply chain.
This chart shows how air fares surged in April - unlike in 2018, when Easter came earlier:
The ONS explains:
Prices for air fares typically rise during the school holidays, which follow similar patterns each year for the summer and Christmas holidays. As such, we see similar price patterns with prices rising through the summer before falling back in the autumn and rising again in December.
For Easter, however, school holidays typically move as the timing of Easter moves from year to year, sometimes falling in March and sometimes in April.
Newsflash: The cost of living in the UK jumped last month, back over the official target.Newsflash: The cost of living in the UK jumped last month, back over the official target.
Consumer prices jumped by 2.1% in April, compared to a year ago, up from 1.9% in March, the Office for National Statistics says.Consumer prices jumped by 2.1% in April, compared to a year ago, up from 1.9% in March, the Office for National Statistics says.
This is partly driven by rising electricity and gas bills, after the cap on energy costs was lifted earlier this year (sending utility firms scrambling to hike their bills).This is partly driven by rising electricity and gas bills, after the cap on energy costs was lifted earlier this year (sending utility firms scrambling to hike their bills).
Air fares also surged, by over 26%, as airlines took advantage of demand for flights over Easter.Air fares also surged, by over 26%, as airlines took advantage of demand for flights over Easter.
The Office for National Statistics says:The Office for National Statistics says:
Rising energy prices and air fares, which were influenced by the timing of Easter, produced the largest upward contributions to change in the rate between March and April 2019.Rising energy prices and air fares, which were influenced by the timing of Easter, produced the largest upward contributions to change in the rate between March and April 2019.
The largest, offsetting, downward contribution came from across a range of recreational and cultural items, which included computer games and package holidays.The largest, offsetting, downward contribution came from across a range of recreational and cultural items, which included computer games and package holidays.
Marks & Spencer are the top faller on the FTSE 100, down 4%, after launching a £600m rights issue to fund its new tie-up with Ocado.Marks & Spencer are the top faller on the FTSE 100, down 4%, after launching a £600m rights issue to fund its new tie-up with Ocado.
The high street chain is also speeding up its latest transformation plan, by closing another 20 of its full-line stores.The high street chain is also speeding up its latest transformation plan, by closing another 20 of its full-line stores.
My colleague Zoe Wood explains:My colleague Zoe Wood explains:
The retailer said it planned to close 85 of its big high street stores, which is on top of the 35 it has already shut. The company is battling the transfer of clothing sales online and it had already told the City to expect about 100 closures.The retailer said it planned to close 85 of its big high street stores, which is on top of the 35 it has already shut. The company is battling the transfer of clothing sales online and it had already told the City to expect about 100 closures.
The news of the extra branches being axed came as the group pointed to “green shoots” of recovery despite annual profits being pulled down by a £440m bill for a modernisation programme. The overhaul of the struggling chain will also involve the closure of 25 of its Simply Food convenience stores.The news of the extra branches being axed came as the group pointed to “green shoots” of recovery despite annual profits being pulled down by a £440m bill for a modernisation programme. The overhaul of the struggling chain will also involve the closure of 25 of its Simply Food convenience stores.
Marks & Spencer to close another 20 stores as profits plungeMarks & Spencer to close another 20 stores as profits plunge
UK housebuilders are always vulnerable to Brexit uncertainty, so it’s not surprising to see them among the top fallers on the FTSE 100 this morning.UK housebuilders are always vulnerable to Brexit uncertainty, so it’s not surprising to see them among the top fallers on the FTSE 100 this morning.
Persimmon and Barratt Development are both down 2.5%, with Taylor Wimpey losing 1.7%.Persimmon and Barratt Development are both down 2.5%, with Taylor Wimpey losing 1.7%.
The pound’s weakness today shows that the brief optimism that Theresa May might drag her Withdrawal Deal through parliament has faded, fast.The pound’s weakness today shows that the brief optimism that Theresa May might drag her Withdrawal Deal through parliament has faded, fast.
Michael Hewson of CMC Markets explains:Michael Hewson of CMC Markets explains:
The brief move higher in sterling yesterday in the wake of the Prime Minister’s pledge to add a confirmatory referendum to her withdrawal agreement turned out to be yet another false dawn.The brief move higher in sterling yesterday in the wake of the Prime Minister’s pledge to add a confirmatory referendum to her withdrawal agreement turned out to be yet another false dawn.
If anything it appears to have made it much less likely that the deal will pass at the fourth attempt.If anything it appears to have made it much less likely that the deal will pass at the fourth attempt.
Numerous MPs who might have voted for it have already said they won’t, and the calls for her to go have once again become that much louder.Numerous MPs who might have voted for it have already said they won’t, and the calls for her to go have once again become that much louder.
Sterling is taking a pounding this morning, as Theresa May’s latest attempt to get her Brexit deal through parliament flounders.Sterling is taking a pounding this morning, as Theresa May’s latest attempt to get her Brexit deal through parliament flounders.
The pound has hit a four-month low against the US dollar, falling to $1.2662.The pound has hit a four-month low against the US dollar, falling to $1.2662.
Against the euro, it’s fallen for the 13th day in a row to a three-month trough, around €1.136. That’s a new record losing streak against the single currency.Against the euro, it’s fallen for the 13th day in a row to a three-month trough, around €1.136. That’s a new record losing streak against the single currency.
The PM’s new Brexit offer, pitched last night, has already been rejected by opposition MPs and many on her own side. It’s extremely hard to see how the deal could pass, and how May could cling onto the keys to Downing Street if it is rejected.The PM’s new Brexit offer, pitched last night, has already been rejected by opposition MPs and many on her own side. It’s extremely hard to see how the deal could pass, and how May could cling onto the keys to Downing Street if it is rejected.
Brexit: May’s final effort to win backing falls flat as MPs reject ‘new' dealBrexit: May’s final effort to win backing falls flat as MPs reject ‘new' deal
One government minister has just suggested that the prime minister might not survive until Monday!One government minister has just suggested that the prime minister might not survive until Monday!
Quite... if govt tries to delay bringing the bill forward extremely hard to see how your party allows PM to stay on past sunday/monday - just asked a minister if she can stay on past this weekend - answer, ‘I hope not’ https://t.co/53Pj4YSCEUQuite... if govt tries to delay bringing the bill forward extremely hard to see how your party allows PM to stay on past sunday/monday - just asked a minister if she can stay on past this weekend - answer, ‘I hope not’ https://t.co/53Pj4YSCEU
A leadership contest could easily be won by a Brexiteer (Boris Johnson is the front-runner, with Dominic Raab also in the pack).A leadership contest could easily be won by a Brexiteer (Boris Johnson is the front-runner, with Dominic Raab also in the pack).
Jim Reid of Deutsche Bank explains why this is hurting sterling:Jim Reid of Deutsche Bank explains why this is hurting sterling:
Any more negative responses to the new proposed deal and Prime Minister May could resign as soon as this week and attention will shift to the likely Conservative leader contest.Any more negative responses to the new proposed deal and Prime Minister May could resign as soon as this week and attention will shift to the likely Conservative leader contest.
That will probably yield a hard-Brexit supporting PM, which in turn will incrementally raise the odds of a hard Brexit.That will probably yield a hard-Brexit supporting PM, which in turn will incrementally raise the odds of a hard Brexit.
Breaking: Beijing has hit back against the threat of more Chinese companies being blacklisted in the US.Breaking: Beijing has hit back against the threat of more Chinese companies being blacklisted in the US.
Foreign ministry spokesman Lu Kang has told reporters that Beijing opposes America using its powers to “smear” Chinese firms.Foreign ministry spokesman Lu Kang has told reporters that Beijing opposes America using its powers to “smear” Chinese firms.
He’s calling on the US to provide a fair and non-discriminatory environment for Chinese firms.He’s calling on the US to provide a fair and non-discriminatory environment for Chinese firms.
Chinese Foreign Ministry: China Opposes US Using National Powers To Smear US Companies -Urges US To Provide Fair And Non-Discriminatory Environment For Chinese FirmsChinese Foreign Ministry: China Opposes US Using National Powers To Smear US Companies -Urges US To Provide Fair And Non-Discriminatory Environment For Chinese Firms
Bloomberg is reporting that America could impose tough sanctions on five more Chinese technology firms - not just Hikvision.Bloomberg is reporting that America could impose tough sanctions on five more Chinese technology firms - not just Hikvision.
The US is apparently concerned that the firms are helping Beijing suppress Chinese Muslims such as the Uyghur people (who face discrimination, and the threat of being placed in ‘re-education) camps).The US is apparently concerned that the firms are helping Beijing suppress Chinese Muslims such as the Uyghur people (who face discrimination, and the threat of being placed in ‘re-education) camps).
It says:It says:
The U.S. is considering cutting off the flow of vital American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology Co., widening the dragnet beyond Huawei to include world leaders in video surveillance.The U.S. is considering cutting off the flow of vital American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology Co., widening the dragnet beyond Huawei to include world leaders in video surveillance.
The U.S. is deliberating whether to add Hikvision, Zhejiang Dahua Technology Co. and several unidentified others to a blacklist that bars them from U.S. components or software, people familiar with the matter said.The U.S. is deliberating whether to add Hikvision, Zhejiang Dahua Technology Co. and several unidentified others to a blacklist that bars them from U.S. components or software, people familiar with the matter said.
The Trump administration is concerned about their role in helping Beijing repress minority Uighurs in China’s west, they said, asking not to be identified talking about private deliberations. There’s concern also that Hikvision’s or Dahua’s cameras, which come with facial recognition capabilities, could be employed in espionage, the people said.The Trump administration is concerned about their role in helping Beijing repress minority Uighurs in China’s west, they said, asking not to be identified talking about private deliberations. There’s concern also that Hikvision’s or Dahua’s cameras, which come with facial recognition capabilities, could be employed in espionage, the people said.
Trump is considering blacklisting two Chinese surveillance giants over accusations of human rights violations https://t.co/f1EpA0cpFgTrump is considering blacklisting two Chinese surveillance giants over accusations of human rights violations https://t.co/f1EpA0cpFg
While China seeks fresh talks, America is pressing on with its crackdown on Chinese firms.While China seeks fresh talks, America is pressing on with its crackdown on Chinese firms.
According to the New York Times, the US is considering banning Chinese surveillance kit-maker Hikvision from buying US components. A similar ban was slapped on Huawei last week, in a dramatic escalation of the spat between the two sides.According to the New York Times, the US is considering banning Chinese surveillance kit-maker Hikvision from buying US components. A similar ban was slapped on Huawei last week, in a dramatic escalation of the spat between the two sides.
From Beijing, my colleague Lily Kuo reports:From Beijing, my colleague Lily Kuo reports:
The report has sent the company’s shares down, even as Hikvision said it received no notice of the potential blacklisting and said its operations in Xinjiang had never been “inappropriate”.The report has sent the company’s shares down, even as Hikvision said it received no notice of the potential blacklisting and said its operations in Xinjiang had never been “inappropriate”.
China has come under increasing international scrutiny over mounting evidence of the mass surveillance and detentions of millions of Muslim minorities in Xinjiang.China has come under increasing international scrutiny over mounting evidence of the mass surveillance and detentions of millions of Muslim minorities in Xinjiang.
Adding Hikvision to the US trade blacklist would add to tensions between China and the US, which have been locked in a protracted tariff war for most of the last year. It also raises concerns that the world’s two largest economies are on the edge of a full-blown tech cold war as the US moves to restrict Chinese technology.Adding Hikvision to the US trade blacklist would add to tensions between China and the US, which have been locked in a protracted tariff war for most of the last year. It also raises concerns that the world’s two largest economies are on the edge of a full-blown tech cold war as the US moves to restrict Chinese technology.
US may blacklist Chinese surveillance kit firm Hikvision - reportsUS may blacklist Chinese surveillance kit firm Hikvision - reports
China is calling on Washington to resume trade talks, as the dispute between the two major economic powers rumbles on.China is calling on Washington to resume trade talks, as the dispute between the two major economic powers rumbles on.
Chinese Ambassador to the United States Cui Tiankai said last night that Beijing hadn’t slammed the door, despite the clampdown on Huawei.Chinese Ambassador to the United States Cui Tiankai said last night that Beijing hadn’t slammed the door, despite the clampdown on Huawei.
Cui told Fox News:Cui told Fox News:
“China remains ready to continue our talks with our American colleagues to reach a conclusion. Our door is still open.”“China remains ready to continue our talks with our American colleagues to reach a conclusion. Our door is still open.”
But... Cui wouldn’t take the blame for the breakdown in talks this month, which let to another painful round of tit-for-tat tariffs being imposed.But... Cui wouldn’t take the blame for the breakdown in talks this month, which let to another painful round of tit-for-tat tariffs being imposed.
Instead, he firmly blamed the White House:Instead, he firmly blamed the White House:
“It’s quite clear it is the U.S. side that more than once changed its mind overnight and broke the tentative deal already reached.”“It’s quite clear it is the U.S. side that more than once changed its mind overnight and broke the tentative deal already reached.”
“So we are still committed to whatever we agree to do, but it is the U.S. side that changed its mind so often.”“So we are still committed to whatever we agree to do, but it is the U.S. side that changed its mind so often.”
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn whether the cost of living in the UK accelerated last month, as Easter price hikes hit customers in the pocket.Today we learn whether the cost of living in the UK accelerated last month, as Easter price hikes hit customers in the pocket.
Economists predict that UK inflation jumped to 2.2% in April, up from 1.9% in March, with higher energy bills also pushing consumer prices higher. That would put CPI back over the Bank of England’s target of 2%.Economists predict that UK inflation jumped to 2.2% in April, up from 1.9% in March, with higher energy bills also pushing consumer prices higher. That would put CPI back over the Bank of England’s target of 2%.
In normal times, higher inflation would lead to an interest rate rise. But these are abnormal times, so the Brexit crisis means the BoE won’t be rushing to raise interest rates soon.In normal times, higher inflation would lead to an interest rate rise. But these are abnormal times, so the Brexit crisis means the BoE won’t be rushing to raise interest rates soon.
We’re also expecting the latest public finances to show Britain borrowed around £5bn to balance the books in April. That would be a significant improvement on a year ago, when the monthly deficit came in at £7.8bn.We’re also expecting the latest public finances to show Britain borrowed around £5bn to balance the books in April. That would be a significant improvement on a year ago, when the monthly deficit came in at £7.8bn.
We’ll also be watching the British Steel crisis, as the company wobbles on the brink of administration after talks to secure an emergency £30m loan from the government stalled.We’ll also be watching the British Steel crisis, as the company wobbles on the brink of administration after talks to secure an emergency £30m loan from the government stalled.
British Steel on verge of collapse as government talks stallBritish Steel on verge of collapse as government talks stall
On the corporate front, Royal Mail and Marks & Spencer have both just ported sharp falls in profits (more on that shortly). Energy firm SSE, engineering group Babcock and Pets at Home are also reporting results.On the corporate front, Royal Mail and Marks & Spencer have both just ported sharp falls in profits (more on that shortly). Energy firm SSE, engineering group Babcock and Pets at Home are also reporting results.
Marks & Spencer has reported a 9.9% fall in underlying pre-tax profits to £523.2m for the year to March 31Marks & Spencer has reported a 9.9% fall in underlying pre-tax profits to £523.2m for the year to March 31
Plus, central bankers are gathering in Frankfurt for a farewell conference for outgoing chief economist Peter Praet.Plus, central bankers are gathering in Frankfurt for a farewell conference for outgoing chief economist Peter Praet.
The agendaThe agenda
8.30am BST: ECB chief Mario Draghi speaks in Frankfurt8.30am BST: ECB chief Mario Draghi speaks in Frankfurt
9.30am BST: UK inflation figures for April9.30am BST: UK inflation figures for April
9.30am BST: UK house prices for March9.30am BST: UK house prices for March
9.30am BST: UK public finances for April9.30am BST: UK public finances for April
10.30am BST:ECB chief economist Peter Praet speech in Frankfurt10.30am BST:ECB chief economist Peter Praet speech in Frankfurt