Where the City’s movers and shakers get a few things off their chest. Today, it’s Victoria Scholar from Interactive Investor
Supermarkets sound a positive note on inflation
Some good news on inflation at last – Sainsbury’s says food inflation is starting to fall. Its CEO Simon Roberts said the company is “putting all our energy and focus into battling inflation”. This echoes a similar message from the UK’s largest supermarket by market share, Tesco. Last month, its CEO Ken Murphy said there are “encouraging early signs” that food inflation pressures are softening.
Although official grocery prices were still rising sharply by 18.3 per cent in May, according to the latest Office for National Statistics figures, this has come down from 19 per cent in April, suggesting the trajectory is moving in a positive direction at least.
The major supermarkets including Tesco, Sainsbury’s, Morrisons and Asda have been cutting prices in recent weeks in a bid to appeal to the increasingly price sensitive consumer amid the squeeze on living standards. The bigger players are also battling to retain market share against the growing, highly price competitive German discounters, Aldi and Lidl.
Last Friday for example, Tesco announced its second round of price cuts in recent weeks, reducing over 500 items by an average of 13 per cent on goods such as pasta, milk and cheese. But Aldi, which overtook Morrisons to enter the ‘Big Four’ last year, also cut the price of four pints of milk by
Supermarkets have been getting some bad press lately, accused of ‘greedflation’ or profiteering from the backdrop of elevated prices including on wages, energy, food and drinks. But while Sainsbury’s reported strong like-for-like sales growth this week, it insists this is due to higher volumes rather than price hikes.
There have also been criticisms about fuel profits. Last year, UK petrol and diesel retailers were accused of ‘rocket and feather’ pricing by the UK competition watchdog whereby consumer prices shoot up but are slow to come down. Morrisons’ boss David Potts admitted last month “there is more profit at the retail end of fuel”.
For investors though, supermarket shares have paid off this year, with the likes of Sainsbury’s and Tesco logging impressive percentage gains in the first half, significantly outpacing the FTSE 100.
Shares in Coinbase surged on Monday, jumping as much as 13 per cent after the Cboe, an exchange operator, said it was working with the crypto platform to launch a bitcoin ETF.
The Cboe posted an application to release this product with the Securities and Exchange Commission, the US regulator, on Friday.
Bitcoin has staged an impressive recovery this year, up over 75 per cent so far in 2023 after last year’s dismal price action. Ethereum has also been on a tear, gaining more than 50 per cent year-to-date.
UK five-year fixed-rate mortgage costs topped six per cent this week for the first time this year, according to Moneyfacts Group. This is painful news for the estimated 800,000 households with a fixed rate mortgage deal set to expire before the end of the 2023 and could have negative repercussions for the housing market.
JP Morgan analyst Rajesh Patik has expressed concerns about new home sales in the UK, commenting the “potential softening in sales rates from here, given the uncertainty on rates, puts the 2024 volume recovery in jeopardy”.
More than a million fans queued online on Wednesday via Ticketmaster for Taylor Swift’s six shows in Singapore. There were complaints made on Twitter about issues logging onto the website after the pre-sale began at midday.
Last month, Bloomberg reported that the singer is generating ticket sales of over $13m a night, making Taylor Swift the top-grossing artist in the world. Her tour is expected to gross over $1bn, which would be a record high as part of her tour. An average ticket costs a whopping $254 or around £200.
What I’m listening to…
Price pressures and interest rates have dominated discussions about the markets since inflation reared its ugly head post-pandemic.
Fixed Income Explained is a podcast from Interactive Investor’s parent company Abrdn. It aims to provide insights into how current market conditions are affecting fixed income markets. Hosted by Peter Marsland, investment specialist at Abrdn, this podcast provides discussions with various senior members across the investment desks and specialist guests.
The latest episode discusses uncertainty, factors that could influence investor sentiment, and key investment themes for the rest of 2023 with a range of guests to cover the investment landscape. One guest suggests inflation will continue to be the dominant force over the next 12 months.