Closing post
This morning started off with supportive numbers for chancellor Rachel Reeves, with the annual rate of UK inflation easing to 3.6% in October.
That was down from 3.8% a month earlier, and marked the first reduction in five months.
Analysts now expect that inflation has peaked, giving Reeves a chance to point to some positive news for consumers – with the easing having been led by a fall in gas and electricity prices. However, households are still facing higher food bills, which has raised some concerns for struggling consumers.
Still, it has helped increase expectations of an interest rate cut by the Bank of England in December, with the vote likely hinging on BoE governor Andrew Bailey.
With that data out of the way, all eyes have turned to the US where the AI bubble fears will either be calmed or reinforced by Q3 earnings figures released by Nvidia at 9pm GMT this evening.
If Nvidia managed to report improved margins when earnings are released at 9pm GMT tonight, that could help calm some nerves.
Neil Wilson, UK investor strategist at Saxo Markets, expects Nvidia to report a a 54% jump in earnings at to $1.25 per share, with revenues rising 56% year-on-year to $54.8bn.
He says that “deeply correlated stocks” such as Palantir, TSMC, Super Micro, CoreWeave, Nebius, “plus the entire industrial-AI complex” are “on the hook”.
Wilson adds:
Analysts are sounding upbeat ahead of the report with guidance expected to be strong on continued ramp of the GB300 advanced AI servers and generally insatiable AI demand as hyperscalers continue to bolster capex.
The bar is set very high but the stock is now in correction territory having slid over 10% in November and has crossed below its 50-day SMA, as is Microsoft and Tesla.
US stocks edge higher as investors steel themselves for make-or-break Nvidia results
Wall Street is open for trading and it’s a relatively positive start:
Dow opens flat at 46,093.39 points
S&P 500 opens 0.06% higher at 6,621.29 points
Nasdaq opens 0.14% higher at 22,463.07 points
Further development in AI investment, as investors await the Nvidia Q3 results later today:
Asset manager and real estate investment giant Brookfield has announced the launch of a $100bn AI infrastructure fund with equity commitments from Nvidia and the Kuwait Investment Authority.
The Brookfield Artificial Intelligence Infrastructure Fund, which launches today, has already received $5bn of capital commitments from institutional and industry partners, with the fund due to build up a portfolio of energy, land, data centers and other components of the AI infrastructure chain.
Meanwhile, Nokia plans to split its artificial intelligence operations into a separate unit from its telecoms business as it moves to expand the use of AI in its networks, the FT reports
The Finnish telecoms group said that it would use a new network infrastructure division to house its AI and data centre businesses, while the core telecoms network operations would be part of its mobile infrastructure unit.
The AI push comes just weeks after Nvidia invested $1bn in Nokia.
US futures are pointing to a higher start on Wall Street, though it will amount to a waiting game ahead of Nvidia’s earnings report, which is due after the US market closes on Wednesday.
Dow futures are up 0.12%
Nasdaq futures are up 0.43%
S&P 500 futures are up 0.34%
Nvidia will be feeling the pressure to deliver strong third quarter results, with markets viewing the figures as a test of wider AI market strength amid concerns that the technology is facing a valuation bubble.
But even if there is a bubble, Kenneth Lamont, principal at Morningstar, says many viable AI companies could end up emerging after any market correction:
As the most widely held stock in AI and Big Data funds – appearing in nine out of ten funds globally – Nvidia’s Q3 results are expected to reinforce its status as the poster child of AI.
However, its volatility reflects uncertainty around AI’s trajectory, as well as the sensitivity of its valuation to shifts in growth assumptions and competitive pressures.
Framing the debate as either an AI bubble set to burst or the dawn of a lasting transformation misses the point. History shows it can be both: the dot-com boom left behind plenty of failures, but also the tech giants that still dominate today.
While Nvidia’s leadership in advanced chip design has propelled it to the forefront, emerging competitors, geopolitical tensions, and regulatory challenges will shape its future. Investors should remain cautious, as history shows that today’s leaders may not be the winners of tomorrow.
Worth noting, as mentioned in our politics live blog, that prime minister Kier Starmer has refused to rule out extending an income tax threshold freeze in next week’s budget.
When asked by Tory leader Kemi Badenoch during prime minister’s questions to confirm that he wouldn’t break another promise by freezing thresholds, Starmer sidestepped the topic, saying:
The budget is one week today and we will lay out our plans.
Extending the freeze would result in more people being dragged into paying higher rates of tax, particularly as wage inflation pushes up salaries.
During her last autumn budget in October 2024, chancellor Rachel Reeves said that extending the freeze would amount to breaking Labour’s election manifesto pledge to avoid raising taxes for working people:
From 2028-29, personal tax thresholds will be uprated in line with inflation once again.
More on PMQ’s here:
Time to check in on sterling.
The pound has edged 0.17% lower against the US dollar at 1.3121, briefly touching its lowest since Friday last week, when markets were hit by fresh speculation about the contents of the November 26 budget following news that Reeves was ditching plans for an income tax hike.
Part of this is explained by higher expectations of a Bank of England interest rate cut next month following the CPI data released this morning. But the dollar is also being nudged higher ahead of Nvidia’s earnings release due later today (9pm GMT).
Matthew Ryan, head of market strategy at Ebury, said:
The next week or so bodes to be extraordinarily important for sterling, and could have a significant bearing on the trajectory of the UK currency in the next few months.
In the lead up to next week’s all-important budget announcement, market participants will have a handful of tier-1 economic data releases to digest.
This morning’s October inflation report suggested that price pressures did indeed peak in September, as the Bank of England had predicted….This should support bets in favour of a December rate cut, which remains around 80% priced in by swap markets.
October retail sales and the November PMIs (both on Friday) are expected to come in consistent with the growth slowdown narrative.
Severn Trent CEO Liv Garfield stepping down after 11 years
Big news in the utilities sector, with Severn Trent announcing that CEO Liv Garfield will step down at the end of December after more than a decade in the role.
Replacing her will be Severn’s capital and commercial services director Jame Jesic, who will has been offered a £775,000 starting annual salary. That’s compared to the £873,200 currently paid to Garfield (before benefits and bonuses).
Severn said Garfield be sticking around until the end of March 2026 to help with the handover.
The changeover comes at a time of growing public outrage over rising water bills, which have been increasing despite high levels of sewage pollution and executive bonus payouts.
Severn is considered to be among the better-performing privatised water companies in terms of its environmental record, but is still expecting to record 13 overflow spills for 2025 (half its previous annual rate).
The company said it is also likely to hit its leakage reduction target set by regulator Ofwat for the eighth straight year.
However, it’s still due to hike bills by an average of 21% in April, equating to a roughly £99 annual increase, with the average household now set to pay £556 over the course of the year.
News of Garfield’s departure came as the group released its half-year results, showing a 60% jump in pre-tax profits to £307.8m for the six months to the end of September.
Updated
The National Institute of Economic Research (NIESR) says that, unlike last year’s budget which features a hike in employer’s national insurance contributions, it does not expect the chancellor’s budget next week to contribute to a rise in inflation.
Without any upsets, that could pave a smoother path for Bank of England interest rate cuts, forecasting two cuts in 2026.
NIESR’s associate economist Monica George Michail says:
We believe inflation has reached its peak and will continue to slowly trend downwards.
We therefore expect the Bank of England to implement two rate cuts next year but will nevertheless remain cautious in assessing the speed at which inflation is coming down.
And unlike the announcements in the autumn 2024 budget, where a rise in business costs may have contributed to price increases in 2025, we think the upcoming budget is less likely to be inflationary.
However, there remain some risks to the inflation outlook stemming from still-elevated pay growth and high household inflation expectations, as discussed by some MPC members in their November meeting.
Elsewhere: the Netherlands has suspended it seizure of the Chinese owner chip maker Nexperia, the company heart of a bitter six week battle between the EU and China that threatened to halt car production.
Dutch economy minister Vincent Karremans said in a statement on Wednesday that the government would suspend its decision to take supervisory control, made on 30 September, as a gesture of “goodwill” towards Beijing.
Karremans said:
In light of recent developments, I consider it the right moment to take a constructive step by suspending my order under the Goods Availability Act regarding Nexperia.
The decision comes as a delegation from the Netherlands met with officials in Beijing to try and resolve the matter after a bitter war of words erupted last week between the economy minister and the Chinese ministry of commerce.
Karremans added:
In the past few days we have had constructive meetings with the Chinese authorities.
We are positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world.
We see this as a show of goodwill. We will continue to engage in constructive dialogue with the Chinese authorities in the period ahead.
The continued (but easing) rate of rental prices across the country is putting further pressure on struggling households, experts warn.
However, industry lobby groups are arguing that politicians should consider ways to boost supply of rental properties, rather than punishing landlords.
Nathan Emerson, CEO of Propertymark, the membership organisation for estate agents, says:
An increase in rental prices highlights the continuing pressures faced by the private rented sector.
While rising rents may reflect strong demand and limited supply, they also intensify the affordability challenges many tenants are already experiencing.
Letting agents and landlords will need to navigate these conditions carefully, ensuring any increases remain fair and sustainable.Policymakers must recognise that persistent rental inflation points to a system struggling to meet demand and respond with measures that encourage more homes into the sector rather than driving landlords out.
Average UK house figures increased by 2.6% in September
Data alert: Another batch of figures released by the ONS this morning shows a 2.6% rise in UK house prices in September.
That is the smallest annual rise since May this year, and compares to the August reading of 3.1% (following an upward revision to the figures).
Average UK house prices increased by 2.6%, to £272,000 in the 12 months to September 2025, down from 3.1% in the 12 months to August.
— Office for National Statistics (ONS) (@ONS) November 19, 2025
Average UK private rents rose by 5.0%, to £1,360 in the 12 months to October 2025, down from 5.5% in the 12 months to September. pic.twitter.com/1g6qG2dN8D
That was helped by a drop in private sector rents in October, which were 5% higher than a year earlier but lower than the 5.5% annual increase recorded in September.
That is also the smallest increase in over three years, in August 2022.
Commenting on today’s house price data for September 2025 and rents data for October 2025, ONS Head of Housing Market Indices Aimee North said: (quote 1 of 2) pic.twitter.com/RieUbQVywX
— Office for National Statistics (ONS) (@ONS) November 19, 2025
Aimee North continued: (quote 2 of 2)
— Office for National Statistics (ONS) (@ONS) November 19, 2025
Read the full article ➡️ https://t.co/WxxsY2RXQK pic.twitter.com/9quJzYdZH2
Today’s 3.6% CPI inflation reading was shallower than some economists had expected, but even those analysts say this is unlikely to stand in the way of another Bank of England rate cut.
But BoE governor Andrew Bailey continues to be the hinge vote.
James Smith, developed markets economist covering the UK at ING, says UK inflation “is undoubtedly past the peak” and is likely to follow the eurozone in seeing food price levels ease off:
Fortunately, evidence from the eurozone – where fresh food inflation is falling – coupled with a levelling off in the newly-reinstated producer price data for food products, suggests inflation at the supermarkets is probably more or less at its peak.
Services inflation also eased from 4.7% to 4.5%, with the drop principally down to air fares, and restaurant and cafe prices – often seen as a bellwether for “persistence” among services categories – increased sharply on the month.
However that is potentially linked to the broader food price pressure, Smith explained.
Smith adds:
That said, taking a broader view, services is still generally heading in the right direction once you ignore the month-to-month volatility.
Remember too that wage growth in the private sector is easing rapidly.
We doubt there’s anything that will shake the conviction of the Bank’s doves, who argue immediate easing is necessary to offset potential weakness emanating from the jobs market.
This leaves Bailey the deciding factor in December’s rate decision:
The bottom line here is that there’s unlikely to be anything in this data that will change the minds of many voters on the BoE committee.
That means the decision continues to hinge on governor Andrew Bailey, who is somewhere between the two camps – though given he is more sympathetic to the view of the doves, we think he will still tip the balance in favour of a cut in December.
After three months on a high plateau, inflation is beginning to ease again.
The drop from 3.8% to 3.6% in the October consumer prices index sets the UK on a downward path that reduces the pressure on shoppers, businesses and the government.
Never mind that City economists had expected a fall last month. It appears to be a turning point back towards normality after a topsy-turvy year that everyone wants to put behind them.
A little more than 12 months ago the pace of prices growth fell as low as 1.7% and it looked like inflation was beaten, but then came a resurgence in gas and electricity bills and most shockingly for the general public, a return of rocketing food prices.
There were global effects on prices from Donald Trump’s tariffs and domestic pressures from government tax increases in the 2024 budget.
Rachel Reeves has given strong hints that unlike last year there will be measures in the budget next week to accelerate the fall in prices. A cut in the 5% VAT rate on energy is the leading contender, but there could be more.
On Tuesday night Reeves lent her support for a competition crackdown on the dentistry industry and vet businesses, both of which have undergone a merger mania, prompting concerns about monopoly pricing practices.
The chancellor knows that most governments caught in the inflation spiral of 2022-23 were kicked out of office. She is desperate that high inflation does not get added to the checklist of grievances against Labour at the next election.
Read more here:
WH Smith CEO resigns after probe into accounting issues
Elsewhere this morning, there’s upheaval at WH Smith, as my colleague Joanna Partridge reports:
WH Smith’s chief executive has stepped down with immediate effect, after a review found accounting failures in its North American division, prompting the retailer to slash its profit outlook.
Carl Cowling, who has been WH Smith’s group chief executive for six years, will be replaced on an interim basis by the company’s UK boss Andrew Harrison until a permanent replacement is found.
Cowling’s departure came as an independent investigation by Deloitte found “shortcomings” in the retailer’s North American division which overstated supplier income, which led the group to overstate profits at its US business by as much as £50m.
Annette Court, WH Smith’s chair, apologised and said the company recognised “the importance of strengthening controls, governance and reporting procedures across the group.”
Court added:
Our priority now is to rebuild trust and credibility and to improve the performance and profitability of our North America division.
We are confident that the actions we have taken and will continue to implement over the months ahead will ensure a strong foundation for the business going forward.
Nearly £600m was wiped off WH Smith’s market value in August when it discovered the American accounting blunder, forcing the company to cut its forecasts.
The revelations saw its shares take a one-day plunge of 42%, from which they have not yet recovered, which left WH Smith reeling shortly after the sale of its high street business, which has been rebranded as TGJones by its new owners.
Deloitte’s review found weaknesses in the composition of the US finance team, as well as insufficient systems, controls and review procedures for supplier income in its commercial and finance teams. It also found the group had limited oversight of US finance processes.
WH Smith shares are down 2.36% this morning.
Meanwhile, it’s a mixed picture for key stock indexes across Europe:
FTSE 100 is down 0.14%
Italy’s FTSE MIB is down 0.6%
Frances’ CAC 40 is flat
Germany’s XETRA DAX opened up slightly higher by 0.04%
Spain’s IBEX 35 is up 0.17%
UK borrowing costs ease after dip in UK inflation
UK government borrowing costs have eased on the back of this morning’s CPI data.
The yield on the 2-year gilt has fallen 0.028% to 3.776%
Meanwhile, the yield on 10-year UK government bonds is down around 0.018% at 4.539%.
While inflation has dipped, Octobers’ rise in food inflation is raising concerns, especially as businesses and households edge towards the Christmas season.
That includes unions, which are worried about how higher prices of essential goods are impacting struggling families heading into the winter months.
Unite general secretary Sharon Graham said:
Today’s figures will bring no comfort to the millions of families having to choose between heating and eating this winter.
Food prices are going through the roof, with many essentials now costing a quarter more than they did three years ago and still rising.
Workers are demanding the government tackle the cost-of-living crisis and that must begin with next week’s budget.
Karen Betts, chief executive of the Food and Drink Federation (FDF) says manufacturers are paying nearly 40% more for ingredients and energy than they were before the Covid-19 pandemic in January 2020.
She notes they are are also shouldering the costs of new regulations including new packaging taxes and increases to employers’ national insurance contributions.
Betts says this has put food manufacturers on edge about further hits from next week’s budget:
Hard-pressed food and drink companies are finding they simply have no choice but to increase prices.
As the budget approaches, food manufacturers are nervous, with nine in ten worried about the impact of additional costs and taxes on food prices.
We want instead to see government step up and support our sector, by protecting businesses from unwelcome tax surprises and partnering with us to drive growth and build resilience, to help prevent future price rises for shoppers.
This marks the first drop in the rate of annual inflation in five months, and is raising expectations that the Bank of England will cut the base rate – currently sitting at 4% – at its next monetary policy meeting in December.
However, there are still some variables, not least the contents of the chancellor’s budget next week.
George Brown, senior economist at Schroders, said:
Evidence inflation has peaked should tip the scales towards a December rate cut.
But any further rate cuts will largely depend on the contents of the chancellor’s red box. If VAT and green levies are eliminated from household energy bills, inflation could fall by as much as half a percentage point.
But we remain concerned that broader price pressures will prove persistent.
Wage growth is still well above a target-consistent pace, especially given repeatedly weak productivity. The Bank must tread carefully given the heightened risk that high inflation becomes entrenched.
Falling gas and electricity prices were the main drivers for the fall in annual inflation this month, according to the Office for National Statistics (ONS).
That was alongside hotels, where monthly prices fell by 2.2%, compared with a fall of 0.2% a year ago.
It helped offset a rise in prices for food and non-alcoholic drinks, which increased to 4.9%, with bread and cereals leading a rise in prices, up 0.02 percentage points.
The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September 2025.
— Office for National Statistics (ONS) (@ONS) November 19, 2025
Read the article ➡️ https://t.co/Qe6V06RpVI pic.twitter.com/SmDo6VKpZv
Chancellor Rachel Reeves will be celebrating the positive data just days ahead of her autumn budget, giving her a chance to point to tangible changes in pricing for consumers.
In a statement issued by HMT this morning, Reeves says:
This fall in inflation is good news for households and businesses across the country, but I’m determined to do more to bring prices down.
That’s why at the budget next week I will take the fair choices to deliver on the public’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.
Commenting on today’s inflation figures for October 2025, ONS Chief Economist Grant Fitzner said: (quote 1 of 2) pic.twitter.com/n9BniWsG7t
— Office for National Statistics (ONS) (@ONS) November 19, 2025
Grant Fitzner went on to say: (quote 2 of 2) pic.twitter.com/vTHFBINn97
— Office for National Statistics (ONS) (@ONS) November 19, 2025
UK inflation drops to 3.6% in October ahead of crunch budget
BREAKING: UK inflation dropped to 3.6% in October, easing pressure on households and providing a boost for Rachel Reeves as the chancellor prepares for her make-or-break budget next week.
The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index cooled for the first time in five months, declining from a peak of 3.8% over July, August and September.
Reeves has vowed to cut living costs in her highly anticipated tax and spending statement on 26 November, including measures to bring down the inflation rate to smooth the path for the Bank of England to cut interest rates.
Threadneedle Street opened the door earlier this month to a post-budget cut in borrowing costs in December after it signalled inflation had probably peaked amid mounting fears over the strength of the economy.
Borrowing costs have been cut five times since Labour came to power in July 2024, with the last reduction made in August.
Our main story here:
Introduction: UK inflation forecast to show decline from recent peak of 3.8%
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Inflation in the UK is forecast to have dipped to an annual rate of 3.6% in October from 3.8% in September, according to City economists, in a move that could give chancellor Rachel Reeves a leg-up ahead of next week’s crucial budget.
If forecasts prove correct, it would be the first time in five months that annual inflation, measured by the consumer price index (CPI), will have cooled.
A lower reading would give the government some good news, signalling some easing for particularly for hard-pressed consumers, having vowed to cut living costs in her 26 November autumn tax and spending statement.
It would also raise hopes of another interest rate cut from the Bank of England.
Morningstar’s UK economist Grant Slade, who is expecting a slowdown in annual inflation in October to 3.6%, says:
Having reared its ugly head once more in 2025, inflation likely peaked in September when transport costs exerted upward pressure on headline CPI.
The disinflation process remains intact, in our view.
A weakening labour market and well-anchored long-term inflation expectations should allow for the impact of prior supply-side shocks to fade progressively over the coming quarters.
The official figures are released at 7am.
But barring any significant surprises, it still means inflation is holding well-above the government’s 2% target, marking the 13th successive month that CPI has surpassed that level.
The International Monetary Fund forecast last month that UK households would experience the highest inflation rate in the G7 this year and next.
The agenda
7am GMT: UK CPI inflation for October
9.30am GMT: ONS house price and rents data
10am GMT: Eurozone inflation (final reading) for October
1.30pm GMT: US Housing starts
7pm GMT: US Federal Reserve publishes the minutes from the October FOMC meeting
