Published: 02 May 2023
By Suzanne Evans, Director, Political Insight
Food inflation reached yet another record high in April, soaring to 15.7%, according to new data from the British Retail Consortium (BRC). It had stood at 15% in March. While shop price inflation fell slightly by 1% in the month to 8.8%, food prices remained at record highs, the BRC said, largely due to pressures in the supply chain, and the "knock-on effect from increased production and packaging costs" which had a particular impact on convenience food such as ready meals and coffee beans. Fresh food inflation, i.e. vegetables and fruits, accelerated to 17.8%, up from 17 % in March, the highest inflation rate in the fresh food category on record. Ambient food, such as canned soups and vegetables rose to 12.9% in April, up from 12.4% in March. The BRC said overall price rises in the shops had slowed slightly in April because of "heavy spring discounting in clothing, footwear, and furniture".
The Bank of England (BoE) says there was no take up by UK lenders from its emergency funding scheme in the period its short-term lending facility was open daily to lenders – as opposed to weekly - as UK banks weathered the storm following the collapse of Silicon Valley Bank (SVB) and Credit Suisse. “This points to the relative health of the UK financial system when compared to some global peers,” City A.M. suggests. However, the Daily Mail suggests there will be a sharp sell-off in bank stocks around the globe today, given that the California lender First Republic bank was snapped up by JP Morgan yesterday, after it revealed depositors withdrew $100bn (£79.5bn) of cash from the firm in the first three months of this year. First Republic is the fourth US bank to fold in recent months – alongside SVB, Signature and Silvergate - sparking concerns that a wider banking crisis is looming.
The Treasury responded to the failure of First Republic earlier, saying: "As the independent Bank of England has confirmed, the UK banking system remains safe, sound and well capitalised". The spokesperson also said First Republic was "a matter for U.S. authorities".
Meanwhile, banking giant HSBC says its profits got a "provisional gain of $1.5bn (£1.2bn) on the acquisition of Silicon Valley Bank UK Limited”. The London-headquartered lender and Europe's largest bank made the announcement while posting a pre-tax profit of $12.9bn for the three months to the end of March, more than three times the amount it made during the first quarter last year. It bought SVB UK in March for a nominal £1 in a deal brokered by the government and the Bank of England.
British chip designer Arm has registered for a US stock market listing, and it is likely to be this year's biggest to date. The Cambridge-based firm – thought to be valued at £50bn - shunned a listing in London, despite a campaign by government ministers. Arm is said to be planning to raise up to £8bn in its Nasdaq index float. Its sales climbed 28% to £593m in its most recent quarter.
The John Lewis Partnership (JLP) is halving the size of its headquarters after thousands of employees switched to working from home. Its central London offices occupy 220,000 sq ft but only about half of that is being used, and some floors are closed off entirely because so few staff are there, the Sunday Telegraph reported yesterday. The employee-owned partnership, which is also behind the Waitrose supermarket chain, is seeking a new location with about 100,000 sq ft of space, the newspaper said. JLP recently reported an annual loss of £234m.
Broadcaster Sky is reportedly lining up hundreds of job cuts as it grapples with a shift to streaming the Sunday Times reported, saying the cuts are expected to hit customer service staff and the engineers who fit satellite dishes. Sky suffered an 11.5% fall in revenues to £14.3bn last year , despite a rise in profits and customer numbers. Sky was bought for £30bn by US media giant Comcast in 2018, but took a £6.8bn write down on the value of the business last October, blaming 'challenging economic conditions'. Sales of the company's much trumpeted Sky Glass product – a TV with streaming apps and Sky built in that avoids the need for a satellite dish – have reportedly been underwhelming. 'It's in a really tough place,' a source was quoted as saying.
Superdry is in 'positive' talks with investors regarding an equity raise of up to 20%, or some £15m, the London-listed company told investors this morning. Shares in the struggling British fashion brand have fallen 33% so far this year.
London-listed housing and social care provider Mears reported a rise in full-year profit on Friday thanks to a "strong" recovery in revenues. In the year to the end of December 2022, adjusted pre-tax profit grew 37% to £35.2m, on record revenue of £959.6m, up 9% on the previous year. The company said revenue was underpinned by the increased volumes experienced within the Asylum Accommodation and Support Contract. Mears said it had successfully mitigated most of the adverse impacts of inflation, skills shortages and supply chain issues that affected the wider industry in 2022.
Shares in Alphawave IP Group tumbled nearly 15% on Friday after the London-listed UK chipmaker asked for trading to be suspended over delays to its audit. The firm, which posted a 114% surge in annual revenues on Friday, said the audit was "substantially complete" and that it did not expect any changes to the preliminary results. The company made a series of acquisitions last year and said its auditor had requested more time to complete its internal oversight and assurance processes before issuing the formal audit opinion.
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