UK Inflation 3.1%; Consumer Confidence Rises

Arthi Gupta
14 Sep, 2010
New York City

The UK indexes declined after inflation remained at 3.1% but consumer confidence rebounded in August and home prices rose in July. The BoE policy maker Weale noted the British economy is recovering but employment may lag increase in private sector output.

[R]4:15 PM London – The UK indexes declined after inflation remained at 3.1% but consumer confidence rebounded in August and home prices rose in July. The BoE policy maker Weale noted the British economy is recovering but employment may lag increase in private sector output.[/R]

In London, FTSE 100 Index traded lower 0.95 or 0.02% to 5,564.58 and the pound edged higher to close at $1.5458.

The Bank of England''s new policy maker Martin Weale told the Treasury Select Committee today that the British economy is recovering. He reportedly told an appointment hearing if growth is substantially weaker than expected then it would be appropriate for monetary policy to look at ways to stimulate the economy.

Regarding the labor market, Weale said there is a “real risk” that employment will pick up more slowly than private sector output. He added fiscal consolidation will also act as a drag on employment.

The UK consumer price annual inflation remained at 3.1% in August, according to the Office for National Statistics report released today. Annual inflation continues to stay above the central bank''s 2% target.

The most significant contributions to the one-month change in the CPI between July and August came from air fares, clothing and footwear and furniture, household equipment and maintenance.

The ONS data showed that retail price annual inflation eased slightly to 4.7% in August from 4.8% in July. The main factors affecting the consumer price index also affected retail prices. Excluding mortgage interest payments, retail prices were up 4.7% annually compared to 4.8% last month.

The UK home prices rose 8.4% in July from the previous year, the Department of Communities and Local Government said today. Home prices increased 9.9% in June.

Home prices dropped a seasonally adjusted 0.3% in July from a month ago, compared to a revised 0.4% rise in June. The average home price stood at £212,878.

In another report, reports from the Royal Institute of Chartered Surveyors stated net house price balance slumped to -32% in August from -8% in July. RICS said the fall was due to a combination of more sellers returning to the market but dwindling interest from buyers.

Consumer morale in the UK rose for the first time in four months, according to a new survey. The rebound was fueled by increasing optimism about the economic recovery and the jobs market.

Nationwide Building Society''s consumer confidence index rose to 61 in August from 56 in July.

Gainers & Losers

Carpathian Plc gained 1.18% to €0.26 after the company engaged in the investments and development of retail property stated first-half pre-tax profit soared 1243% to €27.26 million from €2.03 million a year earlier. Net rental and related income for the period decreased 18.1% to €11.16 million from €13.63 million in the comparable period.

Cello Group plc fell 1.30% to 45.40 pence after the provider of research, consulting and direct marketing services reported first-half revenue increased 11% to £61.48 million from £55.45 million in the comparable period. Profit for the period was £1.86 million or 3.00 pence per share versus a loss of £4.19 million or 8.23 pence per share in the previous year.

Circle Oil Plc dropped 0.68% to 36.50 pence after the oil and gas explorer said first-half revenues surged 509% to $21.3 million from $3.5 million in the year-ago period. Profit for the period was $2.1 million or 0.50 cents per share, compared to a loss of $15.924 million or 4.57 cents per share in the same period last year.

Debenhams plc rose 2.46% to 66.60 pence after the department store chain said it expects full-year headline profit before tax and exceptional items to increase about 20% from last year on strong gross margin performance.

Hilton Food Group plc decreased 1.24% to 279.00 pence after the specialist retail meat packing business reported pre-tax profit for the 28 weeks to July 18 rose 12% to £11.55 million from £10.35 million last year. Revenue for the period increased 5.3% to £449.88 million from £427.22 million in the previous year.

Norcon Plc edged lower 1.45% to 68.00 pence after the project management and outsourcing services provider reported first-half turnover declined 8.3% to $34.24 million from $37.35 million in the prior year. Profit before tax fell 22% to $4.10 million from $5.24 million in the previous year.

Shore Capital Group plc climbed 0.87% to 29.00 pence after the investment banking group first-half revenues grew 23.3% to £18.28 million from £14.83 million a year ago. Net profit in the period surged 174% to £2.79 million or 1.09 pence per share, compared to net profit of £1.02 million or 0.39 pence per share last year.