BUSINESS LIVE: Inflation slows to 4.6%; Experian profits jump; SSE boosts infrastructure investment

Asda has paid off £200million of its billion-pound debt pile.

The country’s third largest supermarket said it had repaid the loan facility that it borrowed to buy Co-op’s petrol forecourts business last year. Asda, which was acquired by billionaire brothers Mohsin and Zuber Issa in 2021, said its debt pile was now around £4.6billion.

Head of research at Edison Group Neil Shah:

‘The demand for credit data services across the globe has boosted Experian’s numbers with the company showing a strong performance in key markets, notably North America, Europe and Latin America.

‘This surge in demand is largely attributed to an increased consumer interest in affordability assessments and investment portfolio analysis, particularly in the context of the prevailing cost-of-living challenges.

‘The company’s financial health is clearly reflected in its benchmark earnings before interest and tax, which reached $928 million for the six months ending September 30. This marks a notable increase from the $873 million reported in the corresponding period the previous year.’

Adam Vettese, analyst at eToro:

‘Fuller’s has posted a happy set of figures this morning, especially compared to its last update which was much more cautious. Food, drink and accommodation sales are all growing healthily thanks to returning office workers buying rounds in its bars.

‘Profits in particular have surged 48%, coming in the wake of rebounding revenue. It has been a nervous period for the hospitality trade, especially in light of cost-of-living struggles, but it would appear pay rises are helping too as people look to spend more on special occasions.

‘The pub business also says it is seeing a return of weekend trade and tourism boosting its barrels. It is predicting a big festive period too with bookings around Christmas 11% ahead of last year already.

‘With a solid dividend and inflation appearing to recede, it would appear that investors in the pub chain have plenty to toast for now.’

London-listed stocks are on track for a three-day winning streak as cooler-than-expected October inflation data lifts sentiment and both main indices, while a rise in prices of most commodities pushed mining and energy stocks higher.

The upbeat sentiment has spurred a rise in rate-sensitive stocks, with top gainer homebuilders index adding 2 per cent and the banks sector gaining 1.3 per cent.

Precious metal miners have added 1.4 per cent, while industrial metal miners are up 1.7 per cent, as prices of most metals rise on a softer dollar and retreating bond yields.

Experian is up 3.3 per cent after the world’s largest credit data company reported an increase in half-yearly profit, benefitting from sustained demand in key markets North America and Europe.

British power generator and network operator SSE per cent reported half-yearly earnings above its forecast, taking the shares up by 2.2 per cent at the open.

Star stock picker Terry Smith has suffered a pay cut after a downturn in results for his Fundsmith investment vehicle – but he still took home more than £140million.

Assets under management fell by 8 per cent to £36.4billion in the year to the end of March according to accounts filed at Companies House.

Fuller Smith & Turner is preparing for a bumper Christmas trading season with bookings already 11 per cent ahead of last year.

‘Customers are increasingly seeking premium experiences when they are spending their money, and we have the benefit of the lucrative international tourist trade to come with inbound tourism still below pre-covid levels,’ said CEO Simon Emeny.

Dr. Roger Barker, director of policy at the IoD:

‘Although this month’s sharp decline in inflation was already baked into the numbers, due to the downward adjustment of the energy price cap, it is still an encouraging development.

The rate of core inflation (excluding food and energy), which fell from 6.1% to 5.7%, is still relatively high. However, there was a noticeable easing of inflationary pressure across a range of categories of goods and services this month. This must give hope that higher interest rates are starting to work, and that they won’t need to rise further.

However, it’s probably unrealistic to expect rate cuts until well into 2024, given the continued tightness of the labour market and the stubbornness of inflationary pressures in some areas.’

Reckitt chairman Chris Sinclair will retire after nine years at the helm of the British consumer goods company, and is set to be succeeded by Jeremy Darroch at the end of its annual general meeting in May 2024.

The latest appointment follows changes in top management at the firm this year. In August, Nike’s Shannon Eisenhardt was named finance boss months after insider Kris Licht was appointed CEO-designate.

Darroch, who has served on the board of Marks and Spencer, joined Reckitt’s board as a senior independent non-executive dirctor last November, the maker of Durex condoms and Lysol cleaning products said.

AstraZeneca suffered a blow after one of its cancer drugs failed a key clinical trial.

The FTSE 100 pharma group, run by Pascal Soriot, said its treatment Imfinzi had failed to meet its main goal of helping to treat stage 3 non-small cell lung cancer when given alongside chemotherapy.

Thomas Pugh, economist at RSM UK:

‘The huge leap down in inflation in October, from 6.7% to 4.6%, was mainly driven by the jump in energy prices last year falling out of the annual comparison.

‘However, inflation was weaker across the board, encouragingly food price inflation, which has been stubborn, and has now cooled significantly.

‘More importantly, for the Monetary Policy Committee (MPC), core and services inflation, which strip out volatile food and energy prices, also fell sharply, and both came in lower than expected.

‘This is unambiguously positive news for the broader economy, and justifies the MPCs decision to keep interest rates on hold at 5.25%. Indeed, inflation is now 0.3ppts below the forecast the MPC made in August.

‘The sharp drop in inflation will also be important for the labour market. Real wage growth will pick up sharply in October, which should help the economy avoid a recession at the end of the year. The sharp fall in October should also help to anchor inflation expectations and slow wage growth, reducing one of the key risks for the MPC.

I’nflation will probably hover around current levels for the rest of the year, before taking another step down in the first half of next year. However, the second half of the journey down inflation mountain will be tougher. Inflation probably won’t get back to something starting with a two before the second half of next year, and will require interest rates to remain in restrictive territory for a while yet, which is why we don’t expect interest rates to be cut until Q3 next year.’

George Lagarias, chief economist at Mazars:

‘CPI receding at manageable levels probably puts the nail on the coffin of this rate hike cycle. We could begin to see the end for this inflation wave, especially if we don’t experience higher energy prices in the next few months.

‘Lower inflation is consistent with the sluggish consumption data of the past two months.

‘As such, one questions still looms large: will the economy that has succeeded in bringing inflation down to more manageable levels, also achieve to keep growth above the recession line?’

Glencore has set the clock running on the break-up of its business after signing a multi-billion pound deal for the coal arm of Canadian rival Teck Resources.

The FTSE 100 miner and resource trading giant had been pursuing Teck for months, having tabled an initial £18.7billion bid for the entire group in April, which was rebuffed twice by the Vancouver-based firm.

But yesterday Glencore announced it had struck a deal with Teck to buy 77 per cent of the latter’s steelmaking coal business for £5.6billion in cash. The rest will be owned by Japanese corporation Nippon Steel and South Korean group Posco.

Experian profits jumped in the first half as the world’s largest credit data company benefited from sustained demand in key markets North America and Europe.

Improving consumer appetite for affordability assessments and investment portfolio analysis amid a cost-of-living squeeze has boosted demand for Experian’s services.

Experian’s overall revenue for the period was also buoyed by the Latin America business as a result of product launches.

‘All regions contributed positively. Double-digit growth in Latin America, a good performance in North America, improvement in EMEA and Asia Pacific, and resilient growth in the UK and Ireland,’ Experian said in a statement.

The company posted benchmark earnings before interest and tax of $928million for the six months to 30 September, up from $873million in the same period last year.

Emma Mogford, fund manager of the Premier Miton Monthly Income fund:

‘Today’s drop in CPI inflation is another data point which supports the idea that rates don’t need to go higher.

‘However, with core inflation still high, I don’t think we should expect a rate cut anytime soon. The fall in UK inflation, in line with other countries, will be positive for UK equities.’

The Body Shop has been sold to private equity for a valuation of £660million less than it was purchased for six years ago.

The bath and body retailer has been bought by Lloyds Pharmacy-owner Aurelius for £207million. This is a bargain price compared to the £870million Brazilian firm Natura & Co paid in 2017.

Although The Body Shop is a staple on the High Street with 250 stores in the UK, it has seen sales fall in recent months.

SSE has lifted its capital investment expectations by around £2.5billion to £20.5billion over a five-year programme.

The group said this reflects ‘increasing visibility over regulated networks spend and associated supply chain costs’, with around 90 per cent of the boosted investment plan expected to be invested in electricity networks and renewables.

SSE’s half year earnings came in higher than expected as the British power generator and network operator enjoying a lower than forecast effective rate of tax for the fiscal year.

The company reported adjusted earnings per share of 37 pence, above its forecast of at least 30 pence, and reaffirmed fiscal year 2024 adjusted profit expectations of 150 pence apiece.

Consumer price inflation slowed to 4.6 per cent in the year to October, lower than forecasts of 4.8 per cent and down from 6.7 per cent in September, fresh data from the Office for National Statistics shows.

Sterling fell slightly against the dollar after publication of the data which showed key inflation measures watched closely by the BoE also falling by more than expected.

Core inflation, which strips out energy and food prices, fell to 5.7 per cent from 6.1 per cent, while service sector inflation also fell by more than the central bank had expected to 6.6 per cent from 6.9 per cent