BUSINESS LIVE: Shop price inflation slows; Revolution Bars shares suspended; House prices dip

Shop prices rose at their slowest pace since late 2021 last month, lifting hopes that Britain’s recent struggle against rampant inflation could be coming to an end.

Consumers saw shop price inflation rise by 1.3 per cent in March, down from 2.5 per cent the previous month and marking the smallest annual increase since December 2021, according to fresh data from the British Retail Consortium (BRC) and Nielsen.

The Bank of England expects Britain’s headline rate of inflation to dip below its 2 per cent target in the April-to-June period, helped in large part by further falls in energy costs.

House prices fell slightly in March as the spring property market got off to a drab start in the South but the North fared much better.

The latest Nationwide house price index showed a slight 0.2 per cent decline in the average property value last month – but the fall came from a statistical quirk, as a traditionally busier month ended up slow.

The monthly decline was down to seasonal adjustment – which aims to smooth out months that are typically more and less active – whereas the non-adjusted average house price actually rose slightly from £260,420 in February to £261,14 in March.

British manufacturers reported their first overall growth in activity in 20 months in March, thanks to recovering demand in their home market, in further signs that last year’s shallow recession has already ended.

The S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 50.3, higher than a preliminary March reading of 49.9 and up from February’s 47.5.

Before this month, the last time the survey was above the 50 threshold for growth was in July 2022.

Other business surveys and official data have suggested the economy started 2024 on a stronger footing after it went into a recession in the second half of 2023.

The PMI will be studied by the Bank of England, which is watching for signs that underlying inflation pressures are abating sufficiently for it to cut interest rates.

The embattled hospitality firm, which operates Peach Pubs and the Revolucion de Cuba brands, failed to publish its half-year results last week, thereby forcing the shares’ suspension under City rules.

London-listed stocks have kicked off the second quarter with strength, supported by a rise in energy and metal miners, while HSBC is up on the back of the sale of its Canadian unit.

Precious metal miners have climbed 2.7 per cent as the dollar and Treasury yields held firm after strong US data flagged doubts on the start of interest rate cut cycle.

Industrial metal miners follow with a 2.4 per cent uptick, as concerns of tighter raw material supplies and improved demand prospects pushed copper prices higher, while oil and gas stocks are up 2 per cent, tracking higher crude prices.

HSBC has gained 1.7 per cent on the prospects of recognising an estimated gain of $4.9billion in the first quarter of 2024, as it completed the sale of its Canadian unit to Royal Bank of Canada.

With just days to go until the end of the tax year, you might be looking for some last-minute inspiration for your Isa.

Income funds and dividend-paying stocks continue to be popular among investors this year as they hunt steady returns.

Anthony Codling, managing director at RBC Capital Markets:

‘House prices nudged down in March by 0.2% on a seasonally adjusted basis, but with wage growth ahead of house price growth housing affordability is improving.

‘On an annual basis house prices were up 1.6%, but there is evidence of a North-South divide with house prices rising in the North and softening in the South.

‘However, overall, we view house prices as stable, and stability is what the housing market needs in our view.

‘Stable conditions will encourage more people to move home, and the level of housing transactions is on the up.’

Ben Yearsley, director at Fairview Investing:

‘The Office for Budget Responsibility recently revised forecasts it produced for the Autumn statement.

‘Inflation is forecast to be 2.2% during 2024 – down from closer to 4% in the Autumn; indeed, Jeremy Hunt in his recent budget suggested it will start with a “1” in a matter of months with a potentially big impact on gilts and bond markets.

‘Inflation in 2025 is expected to be 1.5%. UK GDP growth has been revised up slightly to 0.8% this year, however GDP per capita is still falling and won’t rise again until 2025. The annual deficit has also been revised down as has the debt to GDP figure. The latest monthly figure shows CPI at 3.4% at the same time as disposable incomes rising.

‘Inflation is still being a pesky nuisance and just won’t die. Latest US figures released mid-March show inflation surprisingly creeping up to 3.2% from 3.1% the prior month. At the same time, the Personal Consumption Expenditure index which tracks items Americans are spending on fell in February to 2.8% from 2.9%.

‘Intriguingly figures from S&P Global show defaults picking up with 29 up to the end of February – the highest level at this stage of the year since 2009. Will the Fed and other central banks continue obsessing with inflation if the economy hits a severe downturn? It seems unlikely, but can they stomach a volte face? S&P Global suggest consumer sensitive companies are most at risk.

‘Truflation has US inflation at 2.02% and the UK at 3.02% both of which have ticked up from a month ago.’

Food prices fell last month in a boost for households as supermarkets ramped up offers to attract customers.

Figures published today showed the cost of groceries fell 0.3 per cent between February and March as retailers tempted shoppers with Mother’s Day and Easter deals.

Prices dropped faster than the 0.1 per cent decline recorded in the previous month amid a price war between the major grocers.

UK house prices fell by 0.2 per cent in March after a 0.7 per cent increase the month before, bucking economists’ expectations for a 0.3 per cent rise, figures from Nationwide show.

House prices were 1.6 per cent higher than a year earlier, a faster rise than February’s 1.2 per cent but short of the 2.4 per cent increase which economists had expected

Revolution Bars Group shares have been temporarily suspended after the firm failed to publish its interim results last week.

The firm, which operates the Revolution, Revolución de Cuba and Peach Pubs brands, told investors last week it is ‘actively exploring all strategic options‘ to ‘improve…future prospects’ after a ‘period of external challenges’.

It said this could include ‘a sale of all or part of the group’, a restructuring plan ‘for certain parts’ of the business or a fundraise, with Revolution Bars in talks with chair of the Gail’s bakery chain and investor Luke Johnson.

Industry chiefs want Labour and the Tories to make manifesto pledges to overhaul the business rates they pay on commercial property such as shops and bars.led calls yesterday for politicians to promise reforms after a double whammy of higher property taxes and increased wages hit the sector.

They want Labour and the Tories to make manifesto pledges to overhaul the business rates they pay on commercial property such as shops and bars.

Industry chiefs said they will be forced to put prices up for customers after rates increased 6.7 per cent yesterday – costing firms in England an extra £1.7billion.

UK shop prices grew at the slowest pace in more than two years last month, adding to signs inflation is now fading fast, fresh data from the British Retail Consortium shows.

Shop price inflation slowed to 1.3 per cent in March from 2.5 per cent in February, the smallest annual increase since December 2021.

Food prices rose by 3.7 per cent, down from 5 per cent, while non-food prices rose by just 0.2 per cent, slowing from a 1.3 per cent increase in February.

The Bank of England expects Britain’s headline rate of inflation to dip below 2 per cent in the April-to-June period, helped in large part by further falls in energy costs.