Closing post
Time for a recap…
Inflation across the Eurozone has fallen to its lowest level since Russia’s invasion of Ukraine. Consumer prices rose by 6.1% in the year to May, while energy costs were actually cheaper than a year ago.
Core inflation, closely watched by central bankers, dipped to 5.3%, suggesting the inflationary pressures on households eased a little last month.
Charles Hepworth, investment director at GAM Investments, says the fall is “a modestly welcome sign for both bond and equity investors”.
Hepworth:
Core CPI which excludes the more volatile (but paradoxically more important from a consumer viewpoint) food and energy inputs rose 5.3% against expectations of a 5.5% advance.
Whilst the delta is going in the right direction, this is still multiple times over the ECB target inflation level and uncomfortable for the ECB whom we believe will still remain in hawkish mode at upcoming policy meetings.
The former US treasury secretary Larry Summers has said Brexit will be remembered as a “historic economic error”, which damaged the UK economy and has helped to drive inflation higher.
Summers told Radio 4’s Today programme:
I think Brexit will be remembered as a historic economic error that reduced the competitiveness of the UK economy, put downward pressure on the pound and upwards pressure on prices, limited imports of goods and limited in some ways the supply of labour.
All of which contributed to higher inflation.
UK factories blamed “post-Brexit trade and transportation complications” for a drop in exports last month, which helped to pull down manufacturing activity in May.
The UK housing market has come under more pressure too. Prices fell by 3.4% in the year to May, the biggest annual drop since 2009.
Fewer mortgages were approved in April than in March, as borrowers paid down their debts, Bank of England data shows.
Mortgage debt & lending declines to record levels in April taking net borrowing of mortgage debt to its lowest level since April 1993 (exc pandemic) Borrowing of mortgage debt by individuals declined from net zero in March to £1.4bn of net repayments in April @bankofengland pic.twitter.com/3rQw01tlCb
— Emma Fildes (@emmafildes) June 1, 2023
In the US, private sector employment increased by 278,000 in May, ahead of expectations, setting the scene for tomorrow’s Non-Farm Payroll.
GOLDMAN: “According to the ADP report, private sector employment rose by 278k in May, 108k above consensus expectations .. We left our nonfarm payroll forecast unchanged at +175k ..” #NFP pic.twitter.com/jc2p97waEZ
— Carl Quintanilla (@carlquintanilla) June 1, 2023
Elsewhere today:
Supermarkets have cut more than 7p a litre from the price of diesel since the UK’s competition watchdog warned it would question retail bosses about unnecessarily high forecourt prices, according to the RAC.
Dr Martens said it has struggled to sell its chunky lace-up boots in the US and admitted attempts to correct “mistakes” in its American supply chain had triggered a slide in its annual profits.
Britain’s biggest retailers and food manufacturers are stepping up lobbying on the government to delay landmark environmental reforms that would force them to pay for the collection and recycling of household packaging waste from next year.
And the Confederation of British Industry, is to lay off a swathe of its workers as it fights for survival amid a crisis prompted by multiple sexual misconduct allegations.
Updated
Food producers and retailers lobby to delay UK household recycling reforms
Britain’s biggest retailers and food manufacturers are stepping up lobbying on the government to delay landmark environmental reforms that would force them to pay for the collection and recycling of household packaging waste from next year.
Industry bosses have used Downing Street crisis talks arranged in response to soaring food prices to warn that the plans – due to come into effect in April 2024 – would drive up shopping bills further amid the cost of living crisis.
In meetings summoned by Rishi Sunak as food prices rise at the fastest annual rate since the 1970s in the past month, supermarket bosses and food manufacturers are understood to have asked ministers to halt the launch of the “extended producer responsibility” (EPR) scheme.
Under the plans, food producers and retailers that sell own-brand products will be obliged to report packaging waste data from January next year and pay the full cost of packaging waste disposal from April. The changes apply to companies with turnover of £1m or more, and the money would be paid to local councils to help fund green bin collections.
Business leaders argue the scheme will cost at least £1.7bn a year, saying the bulk of the cost would be passed on to consumers through higher prices on the supermarket shelves.
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