UK Inflation Flat at 4.5%; Home Prices Decline 0.3%

Arthi Gupta
14 Jun, 2011
New York City

The UK indexes rose after annual inflation remained unchanged at 4.5% in May. The UK home prices declined in April and leading index improved in April. Avis Budget Group agreed to acquire Avis Europe for

[R]3:00 PM London – The UK indexes rose after annual inflation remained unchanged at 4.5% in May. The UK home prices declined in April and leading index improved in April. Avis Budget Group agreed to acquire Avis Europe for £635 million.[/R]

In London, FTSE 100 Index gained 34.33 or 0.59% to 5,808.28 and the pound edged higher to $1.6401.

UK Annual Inflation Remains Static

UK consumer price annual inflation was at 4.5% in May, unchanged from April, data from the Office for National Statistics showed today. The inflation rate continues to stay well above the central bank''s 2% target for the 18th consecutive month on rising food and energy prices.

On a monthly comparison, consumer prices advanced 0.2% in May slower than the 1% increase seen in April.

UK Leading Index Climbs

The Conference Board''s leading indicator for the British economy rose 0.4% on a monthly basis to 103.8 in April, following a 0.5% rise in March.

The Conference Board''s coincident economic index, which measures current economic activity, remained unchanged in April after increasing 0.1% in March.

UK Home Prices Decline

Home prices in the United Kingdom decreased in April according to data released by the Department of Communities and Local Government showed today.

The home price index declined 0.3% annually in April, reversing the 0.9% increase recorded in March.

On a monthly basis, prices decreased a seasonally adjusted 1.1% in April, following the 1.2% increase in March.

The average mix-adjusted home price in the UK fell to £204,439 in April from £205,565 in March.

Separately, home prices in the UK edged lower in May, according to survey results released by the Royal Institution of Chartered Surveyors. The RICS home price index for May declined 7.0 points to minus-28 compared to the April reading of minus-21.

The May reading was the lowest since January.

Avis Budget Group Acquires Avis Europe

Avis Budget Group, Inc. and Avis Europe plc have announced that they have reached agreement on the terms of the acquisition by Avis Budget of all outstanding shares of Avis Europe in exchange for £3.15 in cash per Avis Europe share.

The terms of the transaction value Avis Europe''s ordinary equity at approximately £635 million, or approximately $1.0 billion.

Gainers & Losers

Carphone Warehouse Group Plc fell 0.88% to 395.00 pence after the mobile phones retailer reported fiscal year 2011 revenues increased 1.8% to £5.6 million from £5.5 million in the preceding year. Profit before tax for the year plunged 69.2% to £67.2 million from £218.4 million reported in the previous year.

GlaxoSmithKline Plc gained 0.70% to 1,292.00 pence after the healthcare giant announced a deal to acquire the remaining 51% equity interest of Chinese drug maker Shenzhen Neptunus Interlong Bio-Technique Co. Ltd in a previously formed joint venture for influenza vaccines in China for £24 million or $39 million in cash.

Glencore International Plc slumped 3.31% to 506.05 pence after the Swiss commodities trader said first quarter revenue increased 39% to $44.23 billion from $31.73 billion in the prior year. Net income for the quarter increased 47% to $1.30 billion from $886 million in the previous year.

Separately, CST Mining Group Limited said it entered into a Memorandum of Understanding with Glencore on June 9 in connection with the proposed disposal of its 100% interest in CST Resources, its wholly owned subsidiary, for a total consideration of $475 million.

Tesco Plc dipped 0.15% to 406.60 pence after the department stores operator reported a 7.8% rise in total sales for the first quarter, including petrol, driven by growth across the group.

XL Group plc rose 1.58% to $21.27 pence after the insurance and reinsurance company said that its preliminary loss estimates related to the storms, pretax and net of reinsurance and reinstatement premiums, range from approximately $50 million to $75 million, with the majority attributable to XL''s reinsurance segment.