UK inflation hits three-year low; London house prices fall again – business live
Consumer prices index inflation falls to 1.5%, in a boost to households, thanks to lower energy bills
- Latest: London house prices down again
- CPI falls as energy cap kicks in
- Utility bills fell last month, but clothing costs rose
- Thanks, Ed Miliband!
Earlier:
4.36pm GMT
Finally, after a weak start the FTSE 100 has ended the day little changed.
The blue-chip index has closed 10 points lower at 7,355.
3.13pm GMT
While most eyes are on the impeachment hearings which just began, Fed chair Jerome Powell has told another Congressional committee that America's economy should keep growing steadily despite problems overseas.
Powell told the Joint Economic Committee that slow international growth, and trade tensions, were a risk, adding:
"Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely."
2.50pm GMT
Here's my colleague Jasper Jolly on today's high court ruling against unions who were planning industrial action at Royal Mail:
Royal Mail has won a high court injunction preventing the first national postal strike in a decade, which it said could have disrupted postal voting in the general election.
Members of the Communication Workers Union overwhelmingly backed industrial action by 97% last month, on a turnout of almost 76%. However, Royal Mail successfully argued that there were "irregularities" in the ballot.
Related: Royal Mail wins high court injunction to stop postal strike
2.45pm GMT
NEWSFLASH: Royal Mail has won a High Court injunction to block potential strikes by postal workers in the run-up to Christmas, according to the Press Association....
2.38pm GMT
Over in New York, the US stock market has opened a little lower, but it still near record highs.
Traders are watching for Fed chair Jerome Powell's testimony to Congress later, and the impeachment hearings on Capitol Hill.
Related: Trump impeachment inquiry: witnesses line up for first public hearings - live
2.32pm GMT
Anyone who trusted Neil Woodford with their money should take a deep breath.
Investors in the Woodford Equity Income fund, which was frozen in June after a surge in redemptions, risk losing 33% of their investment as the fund is wound up.
Trapped investors in Woodford Equity Income Fund to lose a minimum of a third of the remaining value -- 32.5% to 42.6% . Remember my poll? You voted 50:50 it would be better:worse than London Capital & Finance (still forecasting investors lose 75%) https://t.co/UDuHksk822
As the estimates come from a review commissioned by Link they should be taken seriously. Investors should note that losses of 33% is the base case, with this figure rising to over 42% in the worst case scenario.
Given these estimates are over and above what investors have already lost through the underperformance of the fund, it could mean investors' overall see their investment shrink by even more than this.
1.50pm GMT
Greg Daco of Oxford Economics shows how energy prices pushed US inflation up last month:
US CPI +0.4% stronger than expected: 50% of gain driven by energy prices +2.7% - #gasoline +3.7%
Core CPI +0.2%
Details:
- Shelter cost +0.1%: smallest since Oct'13
- Rents +0.1%: smallest since Apr'11
- Medical +1%: largest since Aug'16
- Recreation +0.7%: largest since Feb'96
1.48pm GMT
Just in: US inflation rose last month, by more than expected.
Consumer prices rose by 0.4% during October, having been flat in September.
US headline CPI in October lifted to 1.8% from 1.7% (exp 1.7%). Core CPI softened against expectations from 2.4% to 2.3%. pic.twitter.com/PBq3mxDiOe
Services inflation again drives higher CPI ---> Read More: https://t.co/u6xewuhIlO pic.twitter.com/c8Kp8SV7fI
As for the #inflation issue, let's be honest & not get bogged down in semantics. The #FederalReserve does not care about #CPI here. It cares about markets. If stock/credit markets waiver, it will cut more regardless of the data. Harsh policy interpretation? Nope. A realistic one.
1.33pm GMT
In rather awkward timing, the owner of British Gas has just won an appeal against the energy price cap.
Centrica persuaded the High Court that regulator Ofgem had not calculated part of the cap fairly - on the very morning we learned that it has pushed inflation down.
"The judgement does not change the fundamentals of the price cap, which remains in place and will continue to protect 11 million households on default deals, ensuring that they pay a fair price for their energy."
1.09pm GMT
The energy price cap is here to stay, but the utility industry is pushing back against another Labour Party proposal -- nationalisation.
SSE, the energy provider, has told reporters that the move could disrupt the industry - as it reported a jump in profits.
Labour has pledged to nationalise energy networks and also set up a state-owned company to develop and own stakes in the country's offshore wind farms if it wins power in the December 12 election, plans that SSE says could make it more difficult to develop new projects.
Labour's plans would be hugely disruptive for the industry and could risk the UK's leadership position in offshore wind, Alistair Phillips-Davies, SSE CEO said in a telephone call with journalists.
Labour economic policies are popular. % of Britons who support...
Raise income tax rate to 50% on 123,000+ - 64%
Raise income tax rate to 45% on 80,000+ - 60%
Workers on company boards - 54%
Wealth tax - 53%
Nationalise railways/utilities - 45-56%https://t.co/otldsfJ8lG pic.twitter.com/tCAXK1k32s
12.14pm GMT
House prices in the North of England will outpace those in the South for the next five years.
That's according to a report from Savills estate agents, which also predicts that London house prices will keep lagging.
"The economic pull of Manchester continues to be a major factor in the strength of the North West property market, and we've seen a notable increase in interest from buyers outside the area, particularly from London and the South East.
"Wealth created through jobs in the city tends to migrate south to the outer suburbs and Cheshire villages such as Alderley Edge, Knutsford and Wilmslow.
11.49am GMT
Here's Jamie Durham, economist at PwC, on today's house price data:
"Today's house price data from the ONS show that UK house prices increased by 1.3% in the year to September 2019, unchanged from August. The average UK house price in September was 234,000.
"However, the divide between London and the rest of the country continues. Prices in the capital continued to weigh on national house price growth and fell by 0.4% year-on-year.
London was the region with the lowest annual growth, decreasing by 0.4%, followed by the East of England which decreased by 0.2% over the year https://t.co/nKLIpncwbF pic.twitter.com/LDoCBz9Byn
11.39am GMT
Back in 2016, technology entrepreneur Elon Musk spoke warmly about the depth of automotive engineering talent in the UK.
Just look at Formula 1 - it amazes me how much British talent there is in that.
"We are likely to establish a Tesla engineering group in Britain at some point in the future."
Related: Tesla cites Brexit as Germany chosen over UK for European plant
11.20am GMT
Could the eurozone's growth malaise be ending?
New data shows that industrial production rose by 0.1% in September, compared with August - as the slump in factory output bottoms out.
Eurozone Industrial Production +0.1% MoM but still -1.7% YoY in Sept. All major developed economies have now reported & signs of plateauing in the 2018/19 falls. Will be sensitive to any further ramp-up in import-restrictive measures, but signs that supply chains are adjusting pic.twitter.com/RnMTCkUSVR
11.01am GMT
UK house price inflation remains subdued, as prices in the capital continue to fall.
UK average house prices increased by 1.3% over the year to September 2019, unchanged from August 2019, the Office for National Statistics says.
10.57am GMT
Here's our news story on the drop in UK inflation:
Related: UK inflation falls to three-year low of 1.5% as energy prices decline
10.43am GMT
Lower inflation means we should be feeling less miserable, reports Scott Corfe of the Social Market Foundation:
Stronger-than-expected fall in headline UK inflation in October - 1.5% on the CPIH measure, down from 1.7% in September. Combined with low unemployment, the economic "Misery Index" looks set to remain very low/continue falling back in the run-up to the December general election: pic.twitter.com/skkSKdNunP
A key driver of lower UK consumer price inflation in October was energy prices. Gas prices were 8.7% lower than a year ago. pic.twitter.com/pDS9zNaMGX
10.40am GMT
The energy price cap was originally proposed by former Labour leader Ed Miliband,.
But he never implemented it, after losing the 2015 election, and the idea was later pushed through by ex-PM Theresa May.
Daily Mail headline no.1: when Ed Miliband wanted to cap energy price rises
Daily Mail headline no.2: when Theresa May wants to do the same pic.twitter.com/DpoXZ5Fh3m
10.28am GMT
The Resolution Foundation make some good points on inflation here:
Latest @ONS inflation data - the slowdown of the past few months has continued. Annual CPIH inflation was 1.5% in October (down from 1.7%). Inflation is now running at the slowest pace since the devaluation in sterling pushed up inflation following the EU referendum in 2016. pic.twitter.com/97PMOmLU2S
The big driver of this month's slower inflation was in household costs (housing and utilities). This pushed down headline CPIH inflation by 0.2 percentage points. pic.twitter.com/rEjaUSMZHp
Looking forward, inflationary pressure seems to be weakening, with input and output PPI inflation both at their lowest levels since mid-2016 (-5.1% and 0.8% respectively). pic.twitter.com/lYwR3Fdjis
The good news is that the weakening inflation is helping to maintain moderate real wage growth (1.7% in the three months to September) despite signs that the labour market is cooling as nominal wage growth slows. pic.twitter.com/IEGowoicgK
And finally, focusing on inflation for different groups, there haven't been significant changes across the distribution. However, there has been a small slowdown in inflation for private renters. pic.twitter.com/21GUii9JMO
10.27am GMT
UK inflation is now at its weakest since the aftermath of the EU referendum in 2016.
That suggests that the inflationary shock of the slump in the pound -- which drove up import costs - has finally worked its way through the system.
10.18am GMT
The drop in inflation is also good news for state pensioners, who are set to receive a 3.9% increase next April under the 'Triple-Lock' system.
But Steven Cameron, Pensions Director at Aegon, points out that this hasn't been confirmed yet.
If price inflation remains at 1.5% this boosts retirees' purchasing power by 2.4%. However we still await an official rubber stamp, which after a cancelled budget and election purdah is taking longer than expected.
"While falling prices are good news for consumers, especially in light of the latest wage growth figures, released yesterday, slowing from 3.8% to 3.6%, there are many question marks for the future with Brexit and a general election all adding to uncertainty."
10.09am GMT
At just 1.5%, Britain's inflation rate has moved further below the Bank of England's target of 2% in the medium term.
That won't panic the Bank, of course, but it could encourage policymakers to consider lowering interest rates soon (two voted for a cut to 0.5% last week).
These numbers follow hard on the heels of the downbeat economic data released earlier in the week which showed a slowdown in underlying wage growth, a fall in employment and the weakest GDP growth since 2010.
Altogether, this crop of data suggests any move by the Bank of England over coming months is more likely to be a rate cut than a hike. Even so, the most likely outcome remains that the Bank remains on hold - particularly now there are signs the worst of the global economic slowdown is behind us."
10.01am GMT
This drop in inflation should cushion workers from the impact of slowing wage growth.
We learned yesterday that average earnings are rising by 3.6% per year, down from 3.8% a month earlier. So with inflation at 1.5%, real wages are rising by around 2.1%.
9.56am GMT
The ONS also reports that food and non-alcoholic drinks became a little cheaper last month:
Most of this downward movement came from vegetables (including potatoes) and fruit where prices fell this year but rose a year ago. There were small, partially offsetting upward movements across the food division and from non-alcoholic beverages, where prices overall fell by less than a year ago.
Across the division, the largest movements came from ladies' clothes and footwear, where prices rose this year compared with falls a year ago. The only two standout items were ladies' formal trousers and branded trainers.
9.47am GMT
Back in August, Ofgem ruled that the average annual energy bill for 11m homes will fall from 1,254 to 1,179, from the start of October.
It also pushed down the bills for households on pre-paid meters (but only by 25).
Related: Winter electricity and gas bills fall as Ofgem lowers price cap
9.39am GMT
Some instant reaction:
Commenting on today's inflation figures, an ONS spokesperson said: https://t.co/CsvyYSJ2nc pic.twitter.com/gSnqfcXQYC
Inflation down to lowest level in nearly three years, both CPI and CPIH at 1.5%. ONS cites impact of Ofgem energy price cap pic.twitter.com/uL93EDWEHp
UK CPI inflation down from 1.7%y/y in Sep to 1.5%y/y in Oct. Core inflation held steady at 1.7%y/y. Gas, electric & other fuels were the main downward push (result of Ofgem's energy price cap). Clothing & footwear the main upward push on inflation. RPI: 2.1%y/y CPIH: 1.5%y/y. pic.twitter.com/g10PSXLCXJ
9.36am GMT
Lower energy bills helped to push UK inflation down last month, in a boost to households.
The Office for National Statistics says:
9.32am GMT
Newsflash: UK inflation has fallen to its lowest level in almost three years.
The Consumer Prices Index rose by 1.5% year-on-year in October, down from 1.7% in September.
9.26am GMT
There's plenty of UK corporate news this morning, including:
9.13am GMT
New Zealand's central bank has also startled the markets overnight, by leaving interest rates on hold.
The Reserve Bank of New Zealand has been expected to cut borrowing costs, but instead left them at a 1% (still a record low) - despite signs of weak growth.
"We expect economic growth to remain subdued over the remainder of the calendar year. We will continue to monitor economic developments and remain prepared to act as required."
8.46am GMT
All the main European indices are a little lower this morning, pulling the Stoxx 600 index of EU companies down by 0.35%.
Mixed messages on trade from Trump and ongoing fears about the seemingly uncontrollable situation in Hong Kong has left Asian equines shaken. Hong Kong dipped another 2%, with China, Tokyo and Sydney all weaker. Hong Kong appears to be a city in complete chaos. One fears it could get a lot darker for the people of the city before the light emerges.
European equity markets are taking their cue from Asia with a softer open. The Stoxx 600 dipped about 0.25% in early trade while the FTSE 100 was off 0.5%. There are jitters again like we saw on Monday morning.
8.13am GMT
Britain's FTSE 100 index has opened 26 points lower (-0.4%), dragged down by trade war jitters.
Financial stocks are among the fallers, with HSBC losing 1.6%, Barclays off 1.4% and Prudential down 1.3%. Cruise operator Carnival and luxury fashion group Burberry, who are both vulnerable to growth worries, are also down over 1%.
8.03am GMT
The escalating crisis in Hong Kong is also weighing on the markets today.
Hong Kong was paralysed on Wednesday, with riot police making arrests in a busy business district, much of the city's public transport suspended and all universities closed following sharp clashes overnight with anti-government protesters.
Around lunch time, hundreds of protesters in office outfits took to the streets in Central, the city's most prestigious business district, for the third day in a row. Bricks were strewn across the normally busy, traffic-filled thoroughfares as white-collar workers shouted slogans. Some held placards emblazoned: "Do not shoot our young people!"
Related: Hong Kong in chaos as protesters gather at universities with bows and arrows
7.51am GMT
Even if a US-China trade deal is secured, Paul Donovan of UBS Wealth Management fears that the damage is done.
He says:
US President Trump suggested there was no uncertainty. That would seem to be challenged by quite a lot of evidence. UBS's survey of industry leaders shows trade policy is causing uncertainty, which is reducing and changing investment. That is unlikely to be repaired by a trade deal.
Trust in the global trading order has been damaged.
7.27am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
"I tell it to everybody: If we don't make a deal, we're going to substantially raise those tariffs, they are going to be raised very substantially."
The Dow was perfectly unchanged on Tuesday, a rare occasion on Wall Street - https://t.co/FsDwtT3Jw3 #VIXC #LatestComments pic.twitter.com/omr7UgwGQJ
The Dow is unchanged.
Today didn't happen. pic.twitter.com/aqdsx8KmmS
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