BUSINESS LIVE: Inflation slows to 3.4%; Prudential profits jump; Johnson Matthew sells unit for $700m

Just before close, the FTSE 100 was 0.07% up at 7,743.67.

Meanwhile, the FTSE 250 was 0.32% higher at 19,495.01.

Food brands have denied ‘shrinkflation’ despite selling smaller products for similar prices in a heated exchange with MPs over profits made during the cost-of-living crisis.

Bosses of Unilever and Kraft Heinz were accused of taking shoppers for ‘mugs’ at an Environment, Food and Rural Affairs (EFRA) committee hearing as they claimed there were a number of reasons behind the shrinkage of its goods.

Eye-catching fashion shows and new collections aren’t holding back the sell off in luxury fashion stocks.

Gucci owner Kering saw its share price fall over 13 per cent to €368.05 on Wednesday, meaning nearly €8billion has been wiped off its total value.

The French luxury goods group warned its first-quarter sales are likely to drop by around 10 per cent, weighed down by star label Gucci amid weakness in Asia.

Beyond the challenges at Kering, analysts flagged the update as a potential drag on the luxury sector, with Citi calling it ‘a rather worrying signal’.

Inflation has fallen to its lowest level in more than two years, dipping to 3.4 per cent in February.

The latest figures from the Office for National Statistics (ONS) now show the CPI index dropped from 4 per cent in January, to its lowest level since September 2021.

Fintel is on the hunt for takeover opportunities in the mortgage and general insurance market in 2024, after the AIM-All Share firm made six acquisitions in just over a year.

The British fintech minnow, which supplies tech and support to financial advisers and wealth managers, has embraced acquisitions as a key part of its growth strategy, helping its shares to add around 50 per cent over the last year.

(PA) – Channel 4 has announced plans to invest millions of pounds worth of advertising in business founders it views as overlooked and underrepresented, as it shrugs off concerns about a TV advertising slump.

Channel 4 Ventures, the broadcaster’s investment arm, said the launch of its new initiative Untapped is the first of its kind in the industry.

It plans to commit a significant proportion of its investment into growing companies led by entrepreneurs with more diverse profiles, including gender, education, socio-economic background, race, employment history and location.

This will be achieved by a new framework which it said will determine founders’ profiles across a range of criteria.

Founders securing significant investment have been predominantly men from top universities, analysis by Channel 4 Ventures found.

The fund uses a media-for-equity model, which means it offers start-ups advertising space on Channel 4, both on TV and its streaming platform, in return for an equity stake in the company.

At the end of 2022, it had about 20 active investments worth £45million.

Britain’s aviation regulator could force London Heathrow Airport to further reduce its airline passenger fees in the next two years.

The Civil Aviation Authority has launched a six-week consultation to determine the maximum average amount the UK’s largest airport can charge air carriers for each customer they fly.

High street chains were today urged to update their payment systems after Greggs became the fourth major firm to suffer an IT meltdown in less than a week.

Payments experts insisted that it was vital for all retailers to sufficiently address ‘legacy issues’ within their operating systems or face the wrath of customers.

House prices rose by 0.5 per cent in the month of January, according to the latest figures from the Office for National Statistics.

The average home was worth 0.6 per cent less than it was a year earlier, but this was far less than the 2.2 per cent fall recorded in the 12 months to December 2023.

There has been a 14 per cent increase in negative opinion towards HMRC compared to October, according to the poll exclusively given to This is Money by the Association of Chartered Certified Accountants.

Glencore plans to lower carbon dioxide equivalent emissions for its industrial assets by 25 per cent by the end of 2030.

The global miner and trader on Wednesday retained its emissions reduction targets of 15 per cent and 50 per cent by the end of 2026 and 2035, respectively, in its 2024 to 2026 Climate Action Transition Plan published on Wednesday.

(PA) – Brewer and pub group Shepherd Neame has reported record high sales as it said inflation was “at last” beginning to ease for under-pressure firms.

The company, which is more than 300 years old and says it is Britain’s oldest brewer, said demand had been particularly strong in London with city centre workers returning to offices.

Revenues for the six months to December reached a record high of £89million, about 4% more than the same period a year ago.

Christmas trading was “exceptional”, said chief executive Jonathan Neame, “as consumers celebrated their first uninterrupted Christmas since 2019”, prior to the Covid-19 pandemic.

It was affected by just six days of rail strikes during the period, compared with a longer period of disruption in the prior year.

“Whilst the cost-of-living crisis is still squeezing consumer pockets, hospitality has fared better than high street retail,” Mr Neame said.

He said pubs have generally been performing better than casual dining, amid restaurant groups feeling the impact of consumers making cut-backs to their spending.

Mike Ashley has agreed to act as a consultant to model train maker Hornby as his retail empire continues to build a stake in the business.

Hornby told shareholders on Wednesday that Ashley had entered into a consultancy agreement with the business via his firm Mash.

Johnson Matthey will sell its medical device components division to Montagu Private Equity for $770million (£550million).

The catalytic converter maker told investors it plans to put the proceeds from the disposal towards a £250million share repurchase scheme, paying down debts, and ‘other general corporate purposes’.

FTSE 250-listed Computacenter is weighing how to spend a record net cash position of £459million amassed last year, with takeovers and investor payouts under consideration.

The group, which sells tech and related services to both the public and private sector, enjoyed record revenue and profits last year as big businesses ploughed huge sums into their IT systems.

London-based Computacenter saw its annual revenue rise by 7 per cent to £6.9billion as total sales increased by 11.3 per cent to over £10billion

For many elderly people, especially those who live in rural communities, a car is a necessity.

It’s their one reliable connection to the outside world, enabling them to shop and see family and friends — invaluable for their independence at a time when most public transport is not fit for purpose.

Ted Baker has appointed administrators, putting hundreds of jobs at risk.

No Ordinary Designer Label (NODL), which trades as the British fashion brand and is owned by US company Authentic Brands Group, has hired restructuring firm Teneo Financial Advisory.

Charles Hepworth, investment director at GAM Investments:

‘Consumer inflation in the UK continues its slow descent towards the 2% base camp, recording a slightly quicker than expected fall to 3.4% in February from the 4% level in January.

‘Coupled with goods inflation slowing we also saw producer price input inflation fall more than expected, declining 0.4% over the month. This should help translate into additional inflation slowing effects in the months ahead.

‘This disinflationary tailwind will encourage market expectations of rate cuts coming this summer and market forecasts expect three 0.25% cuts for the year in total. This is likely the best a government pushing for an autumn election could hope for.’

London-listed stocks are treading water in early trading, with softer-than-expected
inflation data cementing bets of interest rate cuts this year from the Bank of England.

Money markets have priced in about 70 basis points of rate cuts for this year, up from around 67 bps prior to the data release.

The rate-sensitive homebuilders index is among the top sectoral performers, rising 0.7 per cent.

Johnson Matthey is among the FTSE 250’s top performers, surging 6.2 per cent on news it will sell its medical device components business to Montagu Private Equity for $700million.

Burberry is down 5 per cent, tracking a fall in European luxury goods group Kering, which warned about a potential sales drop in the first quarter.

Prudential saw its new business profit rise sharply in the last year, amid strong growth in Hong Kong.

New business profit reached $3.13billion (£2.5billion), up 45 per cent year-on-year, helping the company swing to an IFRS profit after tax of $1.71billion, against a loss of $1billion in 2022.

Just short of half of the firm’s new business profit for the year came from Hong Kong.

The enormous discount to net asset value on FTSE 250-listed HarbourVest Global Private Equity (HVPE) shares could finally narrow after an overhaul of shareholder payouts.

The investment trust, which hosts a portfolio of private equity funds managed by HarbourVest, has traded at a discount to NAV hovering around or below 40 per cent since the start of the year, having traded closer to 50 per cent for much of 2023, Morningstar data shows.

The stock market has a fight on its hands to win a £15billion listing for Unilever’s ice-cream business.

The consumer goods giant yesterday announced a radical shake-up that will see it spin off the unit in a move that will cost 7,500 jobs worldwide.

Shares in Rolls-Royce closed at a record high in the latest sign of its remarkable turnaround.

The FTSE 100 jet engine maker is one of Britain’s biggest defence companies and has gone from strength to strength following a recovery in air travel.

Lindsay James, investment strategist at Quilter Investors:

‘With the majority of divisions seeing reduced levels of annual inflation in February, with areas such as food and communication seeing notable falls, the data paints a picture of broad disinflation across the goods economy, with the services sector seeing a much more muted drop.

‘The plunge in energy bills anticipated in April could see an even greater fall in headline figures, aligning with the Office for Budget Responsibility’s expectation that inflation will average out at 2.2% in 2024.

‘However, economist forecasts for the medium term have considerable variance, highlighting risks that are still present around energy security, supply chain resilience and structural labour shortages.

‘Wage growth has been a significant driver of inflation in the service economy for some months, and recent data showed this is now slowing a little. However, it will likely make the Bank’s 2% target more difficult to achieve.

‘This looks likely to remain a strong inflationary driver while there is an ongoing mismatch in the labour supply available and the level of demand on offer, with recent business surveys flagging that this pressure remains elevated and a cost they are passing through to customers in the form of price rises.

‘Similarly, ongoing disruption to international shipping continues to put pressure on supply chains amidst higher freight rates and longer lead times.’

Japan’s central bank raised its benchmark borrowing rate for the first time in 17 years – ending the global experiment with negative interest rates.

The increase ends eight years of sub-zero rates as the Bank of Japan aimed to stimulate the moribund economy.

It is the last central bank to end negative rates, a policy that has also been pursued by the European Central Bank, as well as counterparts in Switzerland, Sweden and Denmark.

Jeremy Batstone-Carr, European strategist at Raymond James Investment Services:

‘UK inflationary pressures have begun sliding towards the Bank of England’s 2% medium-term target. Though prices are still rising, this is now happening at a rate more consistent with typical levels for February.

‘Today’s data confirms that food and restaurant price pressures have eased, and reflects the additional respite offered by the “Great British Rail Sale” at the end of January.

‘Underlying price pressures are also easing gradually and should continue to do so over spring, providing additional encouragement ahead of the Bank’s base rate decision tomorrow.

‘The Bank’s rate-setters will likely want more evidence of falling inflationary pressures before cutting interest rates. But, as it stands, there is nothing to dissuade the Monetary Policy Committee from cutting the base rate in the early summer.’

George Lagarias, chief economist at Mazars:

‘Inflation fell more than expected, across most categories. An economy in technical recession is more than balancing out building price pressures from external supply chains.

‘While a pickup in producer output prices may give Andrew Bailey some pause, we believe that the overall figure brings the first rate cut closer. It is becoming obvious that the UK, much like Europe, is following a much shallower path in terms of growth and inflation than the US.

‘The Bank of England, like the ECB, may not have the luxury to wait for the Fed to make the first move in the rate cut cycle, but rather choose to lead this dance themselves.’

Consumer price inflation slowed to a weaker-than-forecast 3.4 per cent in February, down from 4 per cent in the previous month and marking its lowest rate since September 2021, fresh data from the Office for National Statistics shows.