UK inflation rises to 0.6%; London average house price exceeds £500,000 – as it happened
Rolling coverage of the latest economic and financial news
- Latest: Wall Street at record highs on Inauguration Day
- London house prices hit fresh record over 500k
- Experts: Stamp duty holiday fuels prices, for now....
Earlier:
- Transport, clothing and recreation costs lift inflation
- Economists predict inflation will rise as pandemic eases
4.18pm GMT
With all eyes on the US inauguration, it's time to wrap up here. A quick recap:
Related: UK inflation jumped in December as shoppers returned to high street
Related: Average London house price exceeds 500,000 for first time
Related: Why London house prices jumped in November
Related: Burberry's European sales slump but Marcus Rashford ads widen appeal
Related: Dixons Carphone has bumper Christmas as online revenues soar
Related: Joe Biden and Kamala Harris arrive at the US Capitol following Trump's final exit - live
3.55pm GMT
The S&P 500 index of leading US shares has climbed to a new peak today, up 1.1% or 43 points at 3,842.
The prospect of co-ordinated stimulus measures from the Biden administration is lifting stocks, and there could be further highs ahead, argues Nigel Green, chief executive and founder of deVere Group, which has $12bn under advisement.
Today's political pageantry in Washington represents the dawning of an era of renewed certainty, stability and the return to established norms, all of which the markets approve.
However, despite the inauguration pomp and ceremony at the Capitol, investors' focus is now already on Janet Yellen, who will take over from Steve Mnuchin as U.S. Treasury Secretary."
The S&P 500 and the Nasdaq both hit record highs in morning trading, boosted by $NFLX $MS $DIS #Inauguration2021 https://t.co/enzklcNHq4 pic.twitter.com/Sj56BfFa6x
3.52pm GMT
Overnight, Chinese billionaire Jack Ma has made his first public appearance since Beijing began a crackdown on his business empire.
Ma, a celebrity businessman and one of the richest people in China, had not spoken publicly since regulators blocked the flotation of Ant Group, the financial payment company he controls. His absence had fuelled speculation that he may have fled China.
My colleagues and I have been studying and thinking, and we have become more determined to devote ourselves to education and public welfare.
Related: Chinese billionaire Jack Ma makes first public appearance in months
3.21pm GMT
A flurry of stocks are touching new record highs on Wall Street today, as the technology boom continue:
33 S&P 500 RECORD HIGHS so far today, incl:
Alphabet $GOOGL
Netflix $NFLX
Chipotle $CMG$ETSY
General Motors $GM
Discover $DFS
Johnson & Johnson $JNJ
Eli Lilly $LLY
Mettler-Toledo $MTD
Applied Materials $AMAT
Analog Devices $ADI
Qualcomm $QCOM
Texas Instruments $TXN
etc@cnbc
3.21pm GMT
Near Record Performance! Since election day, the S&P 500 has rallied 12.8% into inauguration. This marks the second strongest performance from election day to inauguration day dating back to 1929. pic.twitter.com/U7LK2rwVH6
2.47pm GMT
In New York, stocks have opened higher as traders watch Donald Trump depart the White House, ahead of Joe Biden's inauguration as the next US president.
The Dow Jones industrial average is up 85 points, or 0.3%, at 31,016 points, with the broader S&P 500 up 26 points, or 0.7%, at 3,825.
The S&P opens up 0.6%, the Nasdaq opens at a record
In the 11 weeks between the Nov. 3 election and Tuesday, the S&P 500 was up a dazzling 12.76%.https://t.co/DeJszdd7gF
2.26pm GMT
A British freight company director with more than over 20 years' experience has told how EU hauliers and transport companies are turning their backs on UK business because they are being asked to provide tens of thousands of pounds in guarantees to cover VAT or potential tariffs on arrival in Britain.
The financial guarantee requirement did not exist before Brexit and EU transport companies who previously provided a shipping service for small and medium-sized firms have decided they do not want the extra financial burden, according to Colin Jeffries, who runs Key Cargo International in Manchester.
We've got people that are trying to bring textiles in from Italy but we are being told there is no haulage availability on that. Nobody's willing to touch anything because of these guarantees. In Poland, we're trying to get masks in for PPE in the workplace and we can't get anyone to bring them over."
Related: 'Absolute carnage': EU hauliers reject UK jobs over Brexit rules
2.15pm GMT
Back on the UK housing market.... Nicky Stevenson, Managing Director at national estate agent group Fine & Country, says confidence has taken some punches" since the blowout price rises in November.
One factor, she points out, is new figures showing the population has fallen in the last year:
There's been a negativity soup served up this week, with the stamp duty deadline now too close for comfort, but let's not forget that when the pandemic erupted some were predicting massive house price falls in 2020. They never materialised and that wasn't just down to the stamp duty holiday, which many now think was either unnecessary or rolled out too early, but rather a dramatic shift in the type of property people wanted to live in and its location.
The hunger to move because of repeated lockdowns is being underpriced and levels of agreed sales reported since November do still point to a resilient market. We will only have to wait a couple of weeks to see if this has continued through January, which is when most buyers could no longer really hope to transact in time.
1.39pm GMT
Morgan Stanley has joined the ranks of Wall Street firms posting strong results during the pandemic.
Earnings jumped by over 60% in the final quarter of 2020, up to $4,430m from $2,733m a year earlier, lifting total earnings last year to $14,418m from $11,301m.
The Firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies.
I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year.
$MS 4Q 2020 earnings: Morgan Stanley reports fourth quarter net revenues of $13.6 billion, net income of $3.4 billion, EPS of $1.81 and ROTCE of 17.7%. Release: https://t.co/k7XK0SwulS (1/5) pic.twitter.com/XyLKd2EqQD
I realize earnings are not the center of anyone's attention today. But FWIW, Morgan Stanley posted a solid report this morning. Just like Goldman Sachs and JPMorgan Chase. $MS up 2% #premarket. $GS $JPM
1.17pm GMT
Here's my colleague Phillip Inman on the rise in UK inflation last month.
The annual rate of inflation rose to 0.6% in December from 0.3% in the previous month as shoppers returned to the high street in most parts of the UK after the end of the second lockdown.
The Office for National Statistics said an increase in transport costs and a rise in computer games console prices as Christmas approached was only partially offset by cheaper takeaway food and lower furniture and household equipment prices.
Related: UK inflation jumped in December as shoppers returned to high street
12.49pm GMT
Bitcoin is not enjoying a Biden Bounce today, though.
It's fallen over 5%, or nearly $2,000, to around $34,500 after Treasury secretary nominee Janet Yellen warned that cryptocurrencies could be used for illicit activities such as terrorist financing.
Senator Maggie Hassan yesterday asked Yellen about the dangers of terrorists using cryptocurrencies during the latter's Treasury confirmation hearing.
Yellen said: You're absolutely right that the technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with terrorist financing, change along with changing technology.
#Bitcoin plunges >5% on latest sign lawmakers & regulators could get tough on cryptocurrencies. Janet Yellen suggested lawmakers 'curtail' use of Bitcoin amid terrorism concerns. Yellen said cryptocurrency transactions mainly used for 'illicit financing'. https://t.co/0aEsQcH7kW pic.twitter.com/2Huls8zqXd
12.29pm GMT
European stock markets have had a decent morning, lifted by the prospect of stimulus measures from the new team in the White House and the easing of Covid-19 restrictions this year.
The Europe-wide Stoxx 600 is up 0.5%, with gains in Frankfurt and Paris.
The pomp and ceremony of inauguration day has come with a similarly chipper outlook from European markets, with traders hoping this marks the beginning of a more stable four years.
European markets are preparing looking forward with optimism this morning, with Joe Biden's inauguration marking the end of a four-year period that married up both Brexit and global trade uncertainty.
Related: Biden inauguration: Trump to leave White House for Florida before ceremony - live updates
12.06pm GMT
Electrical goods retailer Dixons Carphone has benefitted from the boom in home cooking and computer gaming during the pandemic, my colleague Joanna Partridge explains:
Locked-down European consumers bought big-screen TVs, food preparation gadgets and health and beauty appliances, handing Dixons Carphone's 11% more revenue from selling electrical items over the Christmas trading period than a year earlier.
The retailer, which owns the Currys PC World brand, said computing and gaming products were also big sellers during the festive period and online sales had grown by more than 120%.....
Related: Dixons Carphone has bumper Christmas as online revenues soar
11.36am GMT
The number of UK companies which collapsed into administration slumped to historic lows last year, as the government's coronavirus support measures proved to be a lifeline for many businesses.
1,112 companies fell into administration during 2020, a 22% fall compared with 2019, according to the restructuring practice at accountant KPMG, which analysed notices in The Gazette.
Those businesses that remain in hibernation due to ongoing lockdown measures, such as those in the leisure and hospitality and travel and tourism sectors, continue to accrue liabilities while seeing precious little cash flow into the business.
At some point, rent and tax deferrals and loans will need to be repaid. The job retention scheme will unwind. Weaning off these support schemes is going to be a massive challenge for many."
11.35am GMT
While inflation rose in the UK last month, it remains elusive in the eurozone.
Consumer prices fell by 0.3% year-on-year in December, for the fourth month running, according to statistics body Eurostat.
In December, the highest contribution to the annual euro area inflation rate came from services (+0.30 percentage points, pp), followed by food, alcohol & tobacco (+0.25 pp), non-energy industrial goods (-0.14 pp) and energy (-0.68 pp)
Euro area annual #inflation stable at -0.3% in December 2020 https://t.co/YLhzuo1mpw pic.twitter.com/2WosWPRLnH
11.31am GMT
Estate agency Chestertons has confirmed that the housing market was busy in November -- even though England was under its second national lockdown.
It carried out 44% more valuations and brought 76% more new properties to the market than in November 2019 (when the looming general election and Brexit uncertainty may have dampened demand).
The second lockdown no doubt encouraged some people to put their property search on hold, but we didn't notice a big difference and activity levels were still a lot higher than we anticipated for this time of year.
Part of this was driven by the incentive of the stamp duty saving, but we believe the main driver was that people just wanted to move as quickly as possible while conditions were favourable."
11.01am GMT
The 7.6% jump in UK house prices last year is a blow to those trying to get onto the housing ladder.
But Ross Counsell, chartered surveyor and director at Good Move, suggests 2021 will be better for buyers, as the stamp duty holiday expires:
So why are the house prices so high? We can put this growth down to the influx of people looking to buy property in 2020, both before the end of the Stamp Duty Holiday in March, and due to many people simply looking for more spacious properties, particularly in rural locations, during lockdown. Mortgage approvals too are at an all-time 13 year high, and with such high demand for properties and mortgages, naturally comes higher average house prices.
The property market is incredibly competitive, and becoming increasingly more selective for lenders choosing who to lend to. However, it's not all bad news. Despite these record high house prices, we expect them to fall after the end of the Stamp Duty Holiday in March.
10.46am GMT
Jamie Durham, economist at PwC, says the stamp duty holiday drove prices up in London:
Prices in the capital rose by nearly 10% on an annual basis, adding 45,000 to the average home in 12 months, and pushing the average house price to over 500,000 for the first time. The stamp duty holiday is a particular benefit in London and is likely to have played a significant part in this strong price growth, as the higher average house prices means that more stamp duty is typically due."
Despite a weak economy and the considerable impact of COVID-19, this data shows that the housing market has continued to perform strongly, buoyed by the stamp duty holiday, pent up demand and preference changes brought about by the pandemic."
There continues to be a lot of uncertainty in the outlook. The vaccine rollout could help to support the economic recovery and in turn the housing market. However, there is a risk that activity could drop off over the next couple of months as the stamp duty holiday comes to an end. Assuming the Chancellor does not extend the holiday in the March budget, that could feed through to weaker price growth in the coming quarters."
Related: Home buyers face unexpected tax bill when stamp duty kicks in
10.30am GMT
Here's Noble Francis, economics director at the Construction Products Association, on the jump in London house prices in the last year:
... & the increases in house prices in in the year to November 2020 according to the ONS/Land Registry. The 45,240 increase in London house prices was compared with a relative low point in November 2019 due to political (Brexit & General Election) uncertainty... #ukhousing pic.twitter.com/RQSwCzcX1h
The updated chart of average London house prices (that in November 2020 were 9.7% or 45,240 higher than a year ago according to the ONS/Land Registry) & mortgage rates between January 2004 & November 2020. #ukhousing #london #ukhouseprices pic.twitter.com/puCmns9LzH
10.08am GMT
The average London house price has risen over 500,000 for the first time, as the stamp duty holiday helped to fuel demand for property during the pandemic.
London's annual house price growth has followed a sharp upward trend seen in most regions in recent months, likely reflecting a range of factors including pent-up demand, changes in housing preferences and the temporary reduction in property transaction taxes, which are due to end on 31 March 2021.
Looking at the picture within London, house prices have grown more quickly in Inner London than Outer London for some time. In November 2020, two London boroughs had annual house price growth above 20%, one is in Inner London (Kensington and Chelsea, at 28.6%), while the Outer London borough of Brent had annual price growth of 23.9%.
Demand for property in Inner London may be particularly responsive to temporary property tax changes as property prices are high and therefore so is the corresponding tax to be paid. In addition, compared with other regions of the UK, London has a relatively high proportion of properties bought for investment, including from cash buyers and overseas investors.
As such, demand for property in Inner London is likely influenced by a broader range of factors than the rest of the UK, including the forthcoming introduction of additional property tax for non-UK residents and geopolitical circumstances such as the new route to UK citizenship for British Nationals Overseas in Hong Kong, being introduced in January 2021, both of which may push up demand for properties in Inner London.
10.00am GMT
Commenting on today's figures, Deputy National Statistician for Economic Statistics @jathers_ONS said: (1/2) pic.twitter.com/nYUEFgVOd3
.@jathers_ONS continued: (2/2) pic.twitter.com/ANpKH5sfOz
9.47am GMT
Shares in UK pub chain JD Wetherspoon have jumped 6% this morning, after it raised over 93m to strengthen its balance sheet...and buy up struggling pubs.
It is targeting pubs in central London, which have been particularly hard-hit due to the loss of tourist traffic and office workers.
Many have also been closed for longer than large, rural pubs because they cannot meet social distancing standards.
Related: Wetherspoon moves to buy up smaller pubs on the cheap amid Covid crisis
9.18am GMT
Robert Alster, CIO at wealth manager Close Brothers Asset Management, reckons Britin is extremely vulnerable" to a jump in prices this year:
The rate of inflation doubled in December, but ongoing lockdowns and consumer uncertainty, accompanied by falling global oil prices, meant it remained far below the Bank of England's 2 percent target.
With Government debt soaring and individual purse strings tightening, Britain is extremely vulnerable to a rise in inflation in the year ahead. Short-term fluctuations caused by Brexit disruption and exchange rate shifts may not yet concern the Bank, but all eyes will be on when and how wages recover from Covid.
Computer consoles and games helped push up prices-perhaps inevitable when confronted with the prospect of an extended period of time at home with one's family.
9.02am GMT
A highly successful festive campaign" featuring campaigning England football star Marcus Rashford has helped luxury fashion chain Burberry ride out the pandemic.
In November, we launched our Festive campaign, partnering with Marcus Rashford MBE, the English international footballer who has taken a prominent role against child poverty during the pandemic, and global charities championing youth-related causes.
The consumer response to the campaign was exceptional, with engagement on our Instagram campaign posts more than double our Q2 average, and imagery featuring Marcus becoming our most liked Instagram post of all time. Marcus' work to support the UK's youth sits at the heart of our partnership and embodies our commitment to community and going beyond.
Related: Marcus Rashford: the making of a food superhero
Despite the challenging external environment, we made good progress on our strategic priorities in the quarter. We saw a strong increase in full-price sales as our collections and communication resonated well with new, younger clientele as well as existing customers.
Our localised plans and digital capabilities helped drive growth in rebounding markets and we implemented our planned reduction in markdown. While the short-term outlook remains uncertain due to COVID-19, we are well placed to accelerate when the pandemic eases."
We are proud to support @marcusrashford's heroic work to help young people. This is part of our commitment to youth, community and creativity#BurberryVoices pic.twitter.com/KFywzKjmrh
Burberry ad celebrates creativity with Marcus Rashford https://t.co/6ex8FuWgjY pic.twitter.com/vKrw4mAsji
8.44am GMT
Despite picking up last month, UK inflation is still relatively low - having hit a five-year trough in September.
8.30am GMT
Several economists are predicting that inflation will keep rising as the UK economy reopens later this year, following December's increase.
Thomas Pugh of Capital Economics suggests CPI inflation could rise over the Bank of England's 2% target by the end of this year, before dipping in 2022.
Inflation will probably start to rise more sharply from April when the temporary VAT cut for the hospitality sector is reversed and the recent rises in agricultural and energy commodities start to make themselves felt. T
Together these forces could lift inflation to more than 2% by the end of the year. But ample spare capacity means it will probably settle at close to 1.5% by the end of next year. Further ahead, inflation may creep higher if the authorities keep monetary and fiscal policy loose after all the spare capacity in the economy has been absorbed.
@ONS data shows #UK CPI #inflation rate doubled to 0.6% in December 2020 (from 0.3% in Nov) but still the 17th successive month of below @bankofengland target inflation.
Rise in inflation in December was mostly driven by rising transport costs and clothing & recreation prices. pic.twitter.com/sAclP9qgzh
While the short-term outlook for UK inflation is relatively subdued amid a contracting economy, if the current post-Brexit disruption persists this could increase the upward pressure on prices, especially if the mass vaccine rollout triggers a surge in consumer demand.
The doubling in the CPI measure of inflation in December to 0.6% is a reminder of the need to remain vigilant about the price threat. Inflation never seems to be a problem until suddenly it requires firm action to tame it again. The combination of unprecedented government spending, pent up consumer demand and low productivity is a recipe for rising prices. Transport, recreation and clothing were the biggest contributors.
The challenge facing UK policy makers is that historically high debt levels will make it hard for us to rein in inflation with higher interest rates as and when they become necessary. Servicing our high borrowings is expensive enough with rates on the floor.
8.11am GMT
Meat and vegetable prices dipped during December, the ONS reports, with cooked ham and cauliflowers having the largest downward impact.
But today's inflation report won't capture the impact of shortages caused by disruption at UK ports last month:
The December 2020 price collection was completed on or around 15 December 2020, so our price quotes were not influenced by the reported stock shortages in supermarkets as we approached the end of the year.
8.04am GMT
Computer game downloads also nudged inflation up last month, along with smaller upward contributions from computer game consoles, equipment for sport, and plants and flowers".
But the prices of pre-school activity toys and board games fell in the run up to Christmas, the Office for National Statistics adds.
7.32am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The reflation trade is one of the key drivers of the markets right now, as investors bet that stimulus packages and a post-lockdown boom will drive prices higher.
Rising transport costs contributed 0.11 percentage points to the monthly change, while increasing prices for clothing, and recreation and culture items both contributed 0.10 percentage points to help increase inflation; these were partially offset by a downward contribution from falling food and non-alcoholic beverage prices.
The largest upward contribution [in the recreation and culture grouping] came from data processing equipment, where prices for computer software, PC peripherals and laptops were overall largely unchanged between November and December 2020, but fell between the same two months in 2019.
#UK #consumer price #inflation rose slightly more than expected to 0.6% in December (consensus: 0.5%) from 0.3% in November. Main upward impact on inflation from clothing prices, transport costs & recreation & culture. Core inflation up to 1.4% from 1.1%. Food had downward impact
2021 is all about reflation expectations-- Britain's annual inflation rate accelerated more than expected to 0.6% in December on the back of rising fuel costs and more stable trends in apparel prices. Core CPI also beat, rising 1.4%.
The conversation in the market has generally remained on US politics and the incoming Biden-administrations fiscal stimulus plans.
Subdued price action in bond markets suggest little new information has come about on either front in recent days. Nevertheless, ahead of President-elect Biden's inauguration this evening, where there remains some concern regarding civil unrest and violent protests, the drama enveloping US politics and the US economy remains the most attention grabbing news.
Continue reading...