BUSINESS LIVE: Inflation slows to 1.7%; Whitbread eyes £300m profit boost; Just Eat hit by US slump

Just before close, the FTSE 100 was 0.97% up at 8,329.52.

Meanwhile, the FTSE 250 was 1.02% higher at 21,006.99.

The European Central Bank is expected to pull the trigger on another interest rate cut on Thursday as the eurozone economy continues to show weakness.

Markets are forecasting a 25 basis point cut in the ECB’s key deposit rate to 3.25 per cent, following a cut of identical size last month and marking its third reduction this year.

The Government has demanded answers to why the cost of car insurance has risen by 21 per cent in the past two years.

Insurers will also be quizzed on those hardest hit by rising costs, including ethnic minorities, those on lower incomes and elderly and young drivers.

The founder of BrewDog has warned Britain faces a dearth of business innovation if Labour hikes capital gains tax (CGT) as anticipated in the Autumn Budget.

James Watt, the outspoken and controversial Scotsman who jointly started the craft beer juggernaut alongside Martin Dickie, has warned any move to raise the tax on asset sales will ‘destroy entrepreneurial spirit in the UK’.

House prices boomed between July and August, according to the latest figures from the Office of National Statistics.

The average home rose in value by 1.5 per cent monthly from £288,533 in July to £292,924 in August, representing the second-highest monthly rise in the last two years.

China‘s share of the UK car market has soared 10-fold within two years, MailOnline can disclose.

Nearly 10.3 per cent of imported cars are now manufactured in Chinese factories – up from little north of 1 per cent in 2022, Government data suggests.

John Lewis is offering personal loans up to £35,000 to its customers through a tie-up with Zopa Bank.

The retail giant announced it is expanding its offering though its consumer finance arm John Lewis Money.

Sub-4 per cent mortgage rates are beginning to vanish with lenders re-pricing home loan deals upwards.

NatWest is the latest bank to announce it will be increasing mortgage rates, upping selected fixed rates by up to 0.3 percentage points.

(PA) – The AA has reported higher profits as it cashed in on a growing customer base, after a US investor took a £450million stake in the motoring group.

The company said it is expanding into other driving services amid the launch of an artificial intelligence (AI) car “wellness” app.

It said its pre-tax profit surged 70 per cent to £39 million in the six months to the end of July, compared with £23million the previous year.

This was on the back of a 14 per cent increase in revenues to £712million year on year.

Higher sales were partly driven by an increase in customers, and a higher average income per member – meaning the amount it earns from customers paying for policies including breakdown cover and insurance.

The business has recently benefited from increased customer premiums, which can go up if the cost of settling claims, such as car repairs, rises.

Bristol Street Motors owner Vertu Motors saw profits fall as expected in the first half as the dealership group suffered higher costs.

The car dealership chain revealed its adjusted pre-tax profits plummeted by around a quarter to £23.5million in the six months ending August due to rising costs.

Shoppers stocking up ahead of Christmas helped lift supermarket sales last month, industry data shows.

Supermarket sales increased by 4.7 per cent year-on-year in the four weeks to 5 October, up from 4 per cent the previous month, according to data from NIQ.

ProCook is planning to open 10 new stores next year as the London-listed specialist kitchenware group continues to see sales climb.

First half revenues were up 7.5 per cent, lifted by 7.1 per cent growth in its bricks-and-mortar operations and 12.2 per cent ecomerce growth.

ProCook said it would open 10 new stores in total in its 2025 financial year, having opened four in the first half.

It added: ‘These new stores are in popular regional retail destination centres which benefit from strong visitor numbers that will support increased awareness of ProCook’s brand. Performance of the four new stores since opening is encouraging.’

Boss Lee Tappenden said: ‘The Group’s trading momentum, encouraging performances from our new stores and strong product availability, positions us well for the important peak trading period.

‘We look forward to continuing to build a stronger customer-focused business and deliver sustainable and profitable growth for all our stakeholders in the current financial year and beyond.’

Quilter shares soared on Wednesday after the wealth manager revealed a jump in third quarter inflows, helped by continued gains from high-net-worth clients.

The FTSE 250 group saw clients invest a net £1.4billion during the period, up significantly from £810million and £923million in the first and second quarters of 2024, respectively.

The Financial Conduct Authority has launched a market-wide probe into whether consumers are being overcharged to pay for car and home insurance in instalments.

Within the premium finance sector, customers typically pay for insurance products in instalments financed by a credit agreement – meaning they pay interest on a loan to cover premiums.

An electric car lobby group has criticised Britain’s leading motor industry trade body for publishing ‘skewed’ sales data that appears to suggest diesel cars are outselling EVs.

Electric Vehicles UK, a campaign group formed to dispel ‘myths and lies’ around the electric car market, said the Society of Motor Manufacturers and Traders is downplaying the level of private demand for EVs by not presenting accurate registrations figures.

Whitbread has set a target of making at least £300million more in annual profits and handing investors more than £2billion by 2030 after a first-half earnings slump.

The Premier Inn owner said it was making ‘excellent progress’ on its five-year plan to expand its estate to 98,000 rooms and ‘optimise’ its food and beverage offering by exiting lower-returning restaurants.

But Whitbread reported a 13 per cent decline in adjusted pre-tax profits to £340million for the six months ending 29 August.

Just Eat shares fell on Wednesday after the delivery group’s sales were hit by a sharp downturn in the US during the third quarter.

Total order numbers fell 6 per cent to 211.1million, down from 224.2million by the same point a year ago, with all regions seeing a fall.

But total gross transaction value (GTV) slipped 3 per cent to €6.34billion (£5.3billion), missing market expectations of €6.5billion, as double-digit declines across North America, Southern Europe and Australia offset gains in Just Eat’s key markets.

Keir Starmer has twice refused to rule out an increase in employer National Insurance contributions in the Budget – stating he had committed to not raising taxes on working people.

However, experts have warned an Autumn Budget rise in the employer national insurance rate or putting NI on pension contributions could have a knock-on impact for employees.

London-listed stocks are trading higher this morning after a bigger than expected drop in consumer price inflation saw investors up bets on futher Bank of England interest rate cuts.

Precious metal miners lead sectoral gains, rising 2.1 per cent in tandem with gold prices, while the rate-sensitive real estate sector has ticked up 1.3 per cent.

But non-life insurers have lost 1.7 per cent after the Financial Conduct Authority began a review of the premium finance market, amid fears that consumers who borrow to pay for motor and home insurance may not be receiving fair or competitive deals.

Quilter has gained 5.7 per cent after the British wealth manager reported higher third-quarter assets under management.

Burberry has lost 4.1 per cent. dragging the personal goods sector to the bottom, after the luxury brand’s peer LVMH reported a 3 per cent fall in third-quarter sales.

A protein powder company set up by a scaffolder from a Liverpool council estate is aiming for a £400million valuation when it lists on the stock market.

In a major vote of confidence in the City, sports health brand Applied Nutrition, founded by Thomas Ryder, is set to float in London later this month.

Sam North, market analyst at eToro:

‘Core CPI…. posted one of the weakest monthly performances in the last 25 years, opening the door for a potential 50bps rate cut by the Bank of England in November.

‘Markets are now repricing lower terminal rates, signalling that UK inflation may not be as persistent compared to other G10 economies.

‘Should the Bank of England have cut rates in October? Probably, but by waiting they have received the confirmation they wanted. It’s now time to up the ante.

‘There are a few data points still to come before the November 7th meeting, but it would take something sizeable to rule out at least a 25bps cut.’

City regulators have launched a probe into the premium finance market, amid fears that consumers who borrow to pay for motor and home insurance may not be receiving fair or competitive deals, as prices across the sector continue to rise.

Premium finance enables more than 20 million people in the UK to pay for insurance in instalments, with the average yearly rate on the amount of money borrowed ranging between 20 to 30 per cent.

The Financial Conduct Authority said on Wednesday it was worried some providers may not be offering fair value, particularly to customers suffering financial strain.

The FCA has sharpened its focus on protection of vulnerable and at-risk customers since unveiling its Consumer Duty push in July 2023.

It has already called on the insurance industry to review the charging of high annual percentage rates (APRs) to customers with low credit risk, and published guidance in April on how firms can better support borrowers in financial difficulty.

The FCA expects to publish an interim report following the market study and proposed next steps during the second half of 2025.

‘People rely on premium finance to spread their insurance costs by paying in smaller monthly payments. We want to ensure that competition works well and make it easier for consumers to find the best deals,’ Graeme Reynolds, director of competition at the FCA, said in a statement.

LVMH shares have slumped 7 per cent on the French market, while domestic rival Kerring is also trading lower.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘After years of runaway price rises, inflation falling below 2% will come as huge relief to consumer and companies, lifting expectations for further two interest rate cuts this year.

‘The last time inflation was below 2% was in April 2021 as the country had just emerged from the third lockdown and strict social distancing measures were in place, squeezing demand.

‘The numbers demonstrate that there was more caution than expected when it came to spending in September, with travellers a lot more reticent to shell out for expensive air fares.

‘There was a notable dip in ticket prices compared to September 2023, after what appears to be a last hurrah of spending in August, when prices were a lot higher than a year ago. This may be a symptom of increased nervousness as the UK Budget looms.

‘Price cuts at the petrol pumps have also, as expected driven inflation lower, on the back of a drop in the oil price during the month. Inflation is now lower than forecast by the Bank of England, but there are still some expectations it could pop up again in the months to come.

‘However, it does seem as though the fight against insidious price rises has been won, and combined with slowing wage growth, financial markets have piled on the bets for a rate cut in November with the chances now being put at more than 91%.’

Business is booming at Boots as its boss completes a swathe of store closures before he leaves.

The pharmacy giant said sales in the three months to the end of August were 6.2 per cent higher than in the same period a year earlier as premium beauty and skincare products flew off the shelves.

LVMH has suffered its first quarterly sales drop since the pandemic after a slowdown in demand for high-end fashion.

The French group, whose brands include Givenchy, Celine and Louis Vuitton – where actress Zendaya is a global ambassador – posted a 3 per cent drop in sales for the three months to September.

It was the first decline since sales tumbled at the start of 2020 when Covid-19 struck.

Zoe Gillespie, investment manager at RBC Brewin Dolphin:

‘It’s a mixed set of results from Whitbread on the face of it, but the long-term story for the company is about growth – even if there are some short-term challenges in the form of softer demand in the UK and a slowing German economy.

‘Premier Inn is a well established and highly cash generative brand in the UK and it continues to make strong progress in Germany, with profitability from the latter approaching in the not-too-distant future.

‘Management’s confidence is reflected in its expectations around profitability, investment, and buybacks, with £2 billion expected to be delivered across these areas by 2030.

‘While the shares have yet to really recover to their pre-pandemic levels, and are down on a year ago, the company’s five-year plan provides a good foundation on which Whitbread can build its recovery.’

Just Eat Takeaway has seen gains in key markets of Northern Europe, the UK and Ireland largely offset by recent sharp declines in its growth markets of North America, Southern Europe and Australia.

The meal delivery firm posted a 4 per cent decline in gross transaction value for the third quarter to €6.34billion, below analysts’ consensus of €6.5billion.

Australia and Southern Europe saw a GTV decline of 11 per cent for the period, while North America slumped 12 per cent.

Boss Jitse Groen said: ‘We made good progress across our key strategic pillars, which we believe will drive growth.

‘Northern Europe and the UK and Ireland continued their positive momentum, and these segments now represent circa 60% of the Group’s total orders. In line with our strategy to diversify, several new partnerships were launched across adjacencies like grocery, pharmacy and wellness in many of our markets.

‘Furthermore, cost and operational efficiencies have allowed us to increase investments while maintaining our outlook. We are well on track to deliver our guidance for the full year.’

Premier Inn owner Whitbread has set a target of at least £300million more profit and over £2billion for shareholder returns in the next five years.

It comes after the hospitality group saw first-half profits slump, with adjusted pre-tax earnings down 13 per cent year-on-year to £340million in the six months to 29 August.

Whitbread chief executive Dominic Paul said: ‘We are making excellent progress with our plans and over the next five years are set to deliver a step change in our performance which will fund significant returns to shareholders.

‘Demonstrating our confidence, we have today announced details of our Five-Year Plan that sets out the scale of our ambition to FY30.

‘Having laid the foundations for future growth, we are executing at pace and remain confident in the outlook as reflected by our increased interim dividend and further share buy-back.’

Total public debt across the world will top $100 trillion (£77 trillion) for the first time by the end of this year, according to a stark forecast by the International Monetary Fund (IMF).

As Rachel Reeves struggles to make her Budget numbers add up, the global watchdog said governments must act now to prevent debt spiralling further out of control or risk having to take even more painful action in future.

Its projections see global debt reaching 93 per cent of gross domestic product (GDP) by the end of this year and 100 per cent by 2030.

Thomas Pugh, economist at RSM UK:

‘The drop in inflation to 1.7% leaves it a whopping 0.4ppts below the last MPC forecast. While the slowdown was driven by lower airfares (11.9% to -5.0%) and fuel (-3.4% to -10.4%), services inflation dropped back to 4.9%, its lowest reading since May 2022, and core inflation dropped to 3.2%.

‘Admittedly, inflation will rebound later this year as favourable base effects fall out of the annual comparison, some of the more erratic factors that pulled down inflation in September unwind and energy prices move higher.

‘But this morning’s data is clear evidence that disinflation is continuing to move through the economy at pace, and should reassure the Bank of England that it can move to cut interest rates more aggressively without stoking higher inflation.

‘Finally, the drop in inflation will come too late to help out the Chancellor at the budget, as September’s inflation rate is one factor used in setting next year’s benefit payments. But a much larger budget than expected, combined with higher borrowing, could keep the MPC cautious, despite the more positive outlook on inflation.’

Hetal Mehta, head of economic research at St. James’s Place:

‘The fall in UK inflation is very broad-based, and for the BoE, the core inflation and services inflation numbers in particular will be good news.

‘They should consolidate the expectations of a cut in November and perhaps the vote split will narrow.

‘As for back-to-back cuts, I think more evidence of a continued decline in inflation is needed before we see this and suspect the BoE will also want to have a more time to digest the Budget announcements.’

Consumer price inflation eased more quickly than expected in September, falling from 2.2 to 1.7 per cent, data from the Office for National Statistics shows.

Last month’s inflation reading was below market expectations of 1.9 per cent and boosts the case for further Bank of England interest rate cuts in November.