UK Shop Price Inflation, Service Sector Activity Improves

Arthi Gupta
05 Sep, 2012
New York City

The UK indexes drifted lower after shop price inflation rose marginally and service sector activity improved in August. Irish service sector activity rebounded and the UK foreign currency reserves increased in August. BP Plc faces gross negligence charges in the Gulf of Mexico oil spill.

[R]3:30 PM London – The UK indexes drifted lower after shop price inflation rose marginally and service sector activity improved in August. Irish service sector activity rebounded and the UK foreign currency reserves increased in August. BP Plc faces gross negligence charges in the Gulf of Mexico oil spill.[/R]

The UK indexes declined in cautious trading ahead of the Bank of England policymakers meeting tomorrow.

Separately, ECB President Mario Draghi is expected to announce steps to acquire short term debt of struggling member nations in the euro zone tomorrow.

In London, the benchmark index FTSE 100 declined 12.30 or 0.2% to 5,659.89 and the pound edged higher to $1.5915.

Resource sector stocks were weak after the U.S. reported manufacturing declined for the third month in a row and two Chinese government agencies estimated industrial output growth to fall to 10% in the current year from 13% last year and nearly 15% in 2010.

UK Shop Price Inflation Rises

The UK shop price inflation rose marginally in August, a report from the British Retail Consortium showed Wednesday.

Overall shop price inflation increased marginally to 1.1% in August from 1% in July. Food inflation was unchanged at 3.1% in August. Deflation in non-food slowed to 0.1% from 0.3% in July.

Separately, UK service sector activity improved in August, data from a survey by Markit Economics and The Chartered Institute of Purchasing and Supply showed.

The seasonally adjusted purchasing manager’s index for the service sector rose to 53.7 in August from 51 in July.

UK Foreign Reserves Increase

The UK government''s net foreign currency reserves increased in August, data from the HM Treasury showed Wednesday.

Net foreign currency reserves increased to $47.03 billion at the end of August from $46.29 billion in July.

Gross foreign currency reserves increased to $100.94 billion in August. The Bank of England''s gross reserves dropped $25 million to $26.86 billion, data showed.

Irish Service Sector Activity Rebounds

Irish service sector activity rebounded in August, a report from Markit Economics showed.

The business activity index, that measures the performance of the service sector, rose to 51.7 in August from 49.1 in July. This was a first rise in business activity in four months as new orders increased.

Gainers & Losers

BP plc, the oil and gas explorer fell 2.9% to 423.80 pence after the U.S. Department of Justice accused the company of gross negligence in the Gulf of Mexico oil spill disaster.

Perform Group plc fell 0.5% to 374.20 pence after the digital media company announced the acquisition of German sports media company Sportal Gmbh.

Rio Tinto plc dipped 0.6% to 2,707 pence after the miner said it has completed the sale of the North American portion of its Alcan Cable business to General Cable Corporation for $151 million in cash.

The British Land Company plc rose 0.4% to 529 pence after the real estate investment trust announced the launch of an offering of £300 million of senior, unsecured convertible bonds due 2017 with an option to increase the offering by an additional £100 million.