All the latest business and finance news, as the UK’s consumer prices index picks up to 1.3% despite falling fuel and food pricesInflation up to 1.3% UK house price inflation hits seven-year high 12.40pm GMT Over in Greece, the debt-stricken country’s relations with its creditors – though never easy – appear to have deteriorated, prompting government leaders to hold another emergency round of talks this afternoon.News of the deadlock has hit Greek government bond prices, pushing yields further into the ‘danger zone’ over 8%.“It is evident that there are difficulties and the negotiations are complex and hard.” #Greece 10 year yield pic.twitter.com/6PHYMtcFSt 12.29pm GMT Economists are notorious for arguing, but there’s broad agreement today that Britain’s inflation rate will head south in the months ahead.The Consumer Prices Index rose to 1.3% in October, up from the five-year low of 1.2% set in September (full coverage starts here)Inflation edged higher last month, pushed up by more expensive computer game releases in the run-up to Christmas, but overall price pressures remained low.The Office for National Statistics (ONS) said the slight rise in inflation reflected the fact fuel prices fell between September and October as oil prices came down, but the drop was smaller than a year earlier. The other upward effect on inflation came from computer games “where a number of new titles have been released in the run-up to Christmas replacing cheaper titles in the computer games charts.” The rise likely reflects the arrival onto the market of next generation consoles whose games are significantly more expensive than those for older consoles.The first is the collapse in the oil price, which is feeding through into lower prices on garage forecourts. A litre of unleaded petrol costs just over 120p a litre. Meanwhile, manufacturers are being helped by crashing commodity prices. Input prices for factories are down by more than 8% year-on-year.The second factor is the intense supermarket price war, where the big retailers are slashing prices to try to retain or win market share. Bad news for profits, good news for consumers.Japan calls snap election http://t.co/IKkEnGLQ7Q via @guardian 11.29am GMT One for David Cameron: Bounce in ZEW index suggests increased optimism about the German economy: http://t.co/DM3UjXVUqt 11.24am GMT Martin Beck, senior economic advisor to the EY ITEM Club, has joined the ranks of experts predicting that UK inflation will ease back from October’s 1.3%.And that means interest rates will remain at their current record low for some time.“October’s uptick in inflation is largely a function of base effects and movements in volatile categories. Otherwise, the inflationary trend is downward and there is a good chance that the CPI measure will drop back again over the next couple of months.“It looks increasingly likely that inflation will dip below 1% in the early months of 2015, which would lead to a letter of explanation from Mark Carney to the Chancellor. Against this backdrop, and given the increasingly dovish mind-set of the majority of the MPC, it is unlikely that they will even contemplate an increase in interest rates in the near-term. Indeed, the risks are becoming increasingly skewed towards a lengthy period of inaction.“Oil is currently trading around $10 a barrel below the October average, suggesting that petrol prices still have some way to fall, while today’s producer prices data suggest that the disinflationary pressures coming along the supply chain are intensifying. With core inflation at just 1.5%, underlying pressures remain subdued.“Although this morning’s data show house price inflation being surprisingly resilient at national level, this has masked some interesting trends in the regional data with the earlier strength of London & the South East now subsiding. This cooling in the southern markets is encouraging, as it is a necessary condition for a slowdown in the wider market. We expect to see the ONS series echo other measures in reporting a cooling in the market over the next few months.” 11.14am GMT Union leaders are disappointed that inflation has risen, matching the average basic pay rises over the 12 months to September.“The first signs of progress on real wages have already been stopped in their tracks. Weak demand remains the big problem facing the British economy.“With inflation predicted to remain low well into next year, any talk of interest rate rises is dangerously out of kilter with today’s economic situation. It’s higher wages that are needed to boost living standards and sustain growth, not the threat of higher mortgage payments.” 11.04am GMT The recent fall in the oil price means the UK consumer prices index will remain low for the next year or so, reckons David Kern, chief economist at the British Chambers of Commerce: “Although inflation edged up slightly in October, the impact of low oil prices will have a noticeable impact in coming months, causing inflation to drop. We expect inflation to fluctuate around 1.0% until late 2015, before rising towards 2.0% in 2016.” 11.02am GMT Britain is experiencing a major easing of price pressures, despite the small pick-up in inflation last month, says Ian Stewart, chief economist at Deloitte:Low inflation is likely to ride to the rescue of the UK consumer in 2015, providing vital support for spending and for GDP growth.” 11.01am GMT Rising inflation is all those young people’s fault, jokes Société Générale currency expert Kit Juckes.UK inflation fuelled by transport (half term), tuition fees and computer games. So teenagers, basically. 10.53am GMT Ben Brettell, senior economist at Hargreaves Lansdown, explains why fuel costs pushed inflation up last month, even though the oil price has fallen:Fuel costs and air fares were the main reasons behind the rise. Both have fallen since last month, but this time last year there was an even larger fall between September and October, leading to an upward impact on the year-on-year figures. 10.43am GMT The desperate fight for customers between Britain’s supermarkets means Britons can look forward to fuel and food prices continuing to fall.So reckons James Brown, partner at the London office of pricing experts Simon-Kucher & Partners.With no clear signal from the OPEC countries of a cut in oil supply, we see no immediate sign of a price increase. The good news for consumers is that these falls in oil price are being rapidly passed on at the pumps, largely thanks to the spill-over effects from the supermarket price war.This [price war] shows no signs of abating, with Sainsbury’s the latest to indicate heavy investment in price cuts. Whilst consumers can expect to enjoy sustained low prices, this will inevitably put pressure on the margins of these supermarkets and their suppliers. 10.27am GMT Returning to the rise in UK inflation... the Labour Party says the increase in the consumer prices index means Britain is still suffering a cost of living crisis.Catherine McKinnell MP, shadow Treasury minister, says:“While Ministers deny there’s a cost-of-living crisis these figures show an unexpected rise in inflation. “Working people are £1,600 a year worse off under David Cameron’s government because for four years wages have lagged behind price rises. And working people face a further hit if the Tories win the election. They’ve pledged to cut tax credits again and refuse to rule out another VAT rise. 10.23am GMT Encouraging-ish economic news from Germany -- economic sentiment in Europe’s largest economy has risen this month, and by more than expected. The ZEW institute’s monthly measure of morale has jumped to 11.3, from minus 3.6 in October. That indicates some stabilisation in the German economy, according to ZEW. 10.17am GMT London’s house price inflation has eased a little, mind, but is still ahead of the rest of the UK.House price growth (%y/y) slowed in London and S. East in September, but picked up in the rest of the UK. pic.twitter.com/xQtXBXOYn7 10.09am GMT UK house price inflation has hit a seven year high, with the buoyant London market leading the way. House prices continue to increase strongly across the UK, with prices in London again showing the highest growth.13.3% rise in #houseprices for #firsttimebuyers. Biggest increase in prices for them since March 2005 http://t.co/pSZIV6Tm3W 10.08am GMT Capital Economics: The slight rise in UK CPI inflation in October seems likely to be just a blip in its downward trend 10.02am GMT Britain’s supermarket sector has suffered its first drop in grocery sales in two decades, according to data just released: Grocery sales falling for first time since 1994 according to Kantar Worldpanel figs out this morning. Whole mkt down 0.2% in 12 wks to 9 NovGood news for shoppers as average price of a basket of groceries down 0.4% year on year according to Kantar 9.58am GMT Mark Miller, UK analyst at the Economist Intelligence Unit, also reckons UK inflation will fall back in the months ahead:Going forward, risks remain firmly skewed to the downside amid declining oil prices, emerging signs of another slowdown in global economic activity and subdued wage pressures. We do not envisage a Bank of England interest rate increase until well into the second half of 2015. 9.57am GMT The pick-up in inflation means Bank of England governor Mark Carney is spared the indignity of writing to the chancellor to explain why the consumer prices index isn’t within one percentage point of his 2% target.“It is almost certain that November’s number is lower than October’s and could easily hit 1%, triggering a letter from BOE Governor Carney to Chancellor George Osborne to explain why.“Of course, the increase now wipes out last week’s wage improvement and tightens pressure on pockets heading into Christmas. Retailers will continue to cut prices heading into the festive period, until decent wage strength allows their margins some breathing room.” 9.53am GMT The government appears keen to portray today’s inflation report as a good thing.A HM Treasury Spokesperson has said:“The government’s long term economic plan is working, with inflation falling by three quarters since its peak in September 2011 and pay cheques rising. But the effects of the great recession are still being felt and so we have taken continued action to help with the cost of living, including cutting income tax, freezing fuel duty and reducing the costs of childcare. The job is not yet done and the biggest risk to the recovery would be abandoning the long-term economic plan that is delivering economic security.Oct Inflation 1.3%. Combined with record job creation and economic growth shows our @LibDems recovery plan is working #strongereconomy 9.49am GMT Rising inflation puts more pressure on households. But we don’t know yet whether real wages are still rising, or not.Last week’s unemployment report showed that average wages, excluding bonuses, rose by 1.3% in the three months to September. But we don’t get October’s wage data for another three weeks. 9.45am GMT Over the last year, food prices are down by 1.6% and prices of motor fuels are down by 4.8%, the ONS says. 9.43am GMT So all those XBox and PS4 games helping push inflation higher. #cpi 9.41am GMT This chart shows how UK inflation has fallen pretty steadily over the last few years: 9.36am GMT Why did UK inflation go up to 1.3% last month?The Office for National Statistics says that “smaller falls in transport costs than a year ago – notably for motor fuels and air fares, and price rises for computer games were the main contributors to the rise in the rate of inflation. 9.30am GMT Here we go! UK inflation rose to 1.3% in October, up from 1.2% the previous month.Details to follow.... 9.12am GMT Just under 20 minutes to go until we get the UK inflation data for October, showing how the cost of living changed last month.A soft outcome is likely to pour cold water on BOE rate hike speculation, weighing on the British pound. 9.07am GMT In other corporate news, EasyJet profits have soared by 22% as the no-frills airline continued to bolster its position as Europe’s second largest budget airline. More here. 8.48am GMT Japan PM Abe expected to call an election (for Dec.) 8.48am GMT The word from Japan is that prime minister Shinzo Abe will hold a press conference at 10.10am GMT, to reveal his response to the country’s slide back into recession.Abe is widely expected to postpone the increase in the sales tax scheduled for early 2015, in an attempt to stimulate growth by relaxing his fiscal targets.#Japan sank into recession after 1997 tax hike too; PM Abe expected to delay next scheduled rise when he speaks later pic.twitter.com/WwK7jdG0ml 8.35am GMT UK high street retailer John Lewis has reported that Christmas sales are picking up pace, as my colleague Fiona Walsh explains:...The Christmas rush begins: John Lewis sales broke through the £100m barrier last week, at £108.8m.......this matches the 2013 record as the earliest week for John Lewis sales to top £100m in the run-up to Christmas 8.27am GMT One of the UK’s largest property developers has cited the weak European economy, and next May’s UK general election, as key risks to the sector.Looking forward, from a macro perspective, the UK recovery looks more established, interest rates globally are likely to stay lower for longer and investment flows into UK property remain broad and deep. Some risks remain, notably the UK general election next year along with economic conditions in Continental Europe. Significant upcoming political events, including the UK General Election in May 2015, bring risks both in terms of uncertainty until the outcome is known and the impact of policies introduced, including on the investment case for the UK, and the UK’s relationship with Europe. 8.09am GMT Of course #Quindell shares were trading aruond 150p a month ago. Today trading at 59p 8.07am GMT In the City, the turmoil at insurance claims processor Quindell had continued with the departure of three top executives.Quindell told shareholders this morning that chairman Rob Terry and non-executive director Steve Scott will quit with immediate effect.“I entered into the share transactions announced on 5 November 2014, with the best of intentions for the Company and all shareholders and it would have been my intention to acquire more shares were it not for the restrictions due to the discussions leading to this announcement. I am clearly disappointed and sorry that events turned out as they did. 7.56am GMT General Motors didn’t have a great October, though. Total registrations dropped over 5%, due to the withdrawal of its Chevrolet brand from Europe. 7.47am GMT French carmaker Renault had a good October, with registrations up 10.5% year-on-year. 7.38am GMT Car registrations in Cyprus were almost 35% higher in October than a year ago, AECA reports.A total of 707 new vehicles were registered, up from 524 in October 2013, suggesting the country is recovering from the trauma of its bailout in March 2013. 7.12am GMT The slow but steady recovery in Europe’s car industry continues, with sales rising for the 14th month running.A total of 1,072,837 new vehicles were registered in the EU in October, 6.5% more than in October 2013, data just released by industry body ACEA shows.mainly led by the significant growth recorded in Spain (+18.1%) and in the UK (+9.5%). Likewise Italian (+4.2%), German (+3%) and French (+1.4%) markets expanded. 7.12am GMT Good morning, and welcome to our rolling coverage of the economy, the financial markets, the eurozone and business.Quite a lot coming up this morning. The latest UK inflation data, due at 9.30am GMT, will show if the slowdown in rising prices continues in October, with knock-on effects on real wages and interest rate rises.Japan PM Abe expected to speak at 10:00GMT Speculation over snap elections being announced to reinforce mandate to continue economic reformsUK companies posting numbers today: EASYJET, ENTERPRISE INNS, BRITISH LAND, PRUDENTIAL, PACE, BALFOUR BEATTY, MAN UTD, UK MAIL, SMITHS GROUP Continue reading...
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