Britain's cost of living squeeze eases as pay overtakes inflation – business...

Britain's cost of living squeeze eases as pay overtakes inflation – business live


Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After a year of pain, Britain’s cost of living squeeze could finally be easing.

New earnings figures released this morning are expected to show that pay has overtaken inflation, for the first time since last spring.

Economists predicts that average basic pay grew by 2.8% per year in the three months to February. Chuck in bonuses too, and pay packets may have grown by up to 3%.

That would overtake inflation, which dropped to 2.7% in February, meaning pay packets are no longer being totally eroded by the cost of living.

This would be welcome news for hard-pressed households….and would also raise the chances that the Bank of England hikes interest rates next month.

The pound has already reacted, by hitting a 22-month high this morning. At $1.4360, sterling is its strongest against the US dollar since the Brexit vote of June 2016.

The pound vs the US dollar over the last two years

The pound vs the US dollar over the last two years Photograph: Thomson Reuters

Michael Hewson of CMC Markets explains:

It has already been established that a significant number of Bank of England policymakers are expecting wages to start outstripping headline inflation in the coming months, and today’s average earnings number for the three months to February, could well be the first sign post on the way to that becoming a reality.

The jobs data may also show that Britain’s unemployment rate has stuck at just 4.3%, a 42-year low.

Also coming up today…

The International Monetary Fund will release its latest assessment of the global economy, as its Spring Meeting gets underway in Washington.

Investors will also be watching the situation in the Middle East closely, following last weekend’s strikes in Syria. Any signs that the situation is escalating could hit stocks:

On the corporate front, Associated British Foods has reported a pick-up of sales at its Primark operation.

It adds:

Primark performed well with profit growth of 4% achieved against a backdrop of unseasonable weather in Europe and a margin decline following the adverse effect of currency on purchases.

Graham Hiscott

Primark owner ABF hails “remarkable” rise in UK sales at cheap fashion chain. Says something given the wider high street carnage.

April 17, 2018

Louise Cooper

Primark profit growth 4% “unseasonable weather in Europe & margin decline” from fx
“Looking ahead.. expect profit growth to expansion & improvement in margin” as £ Up vs $

April 17, 2018

High street retailer JD Sports has also defied the high street gloom, by reporting a 24% increase in profits for the last year.

Drinks retailer Majestic Wine has announced a new growth strategy. It is planning to invest up to £12m to win new customers – which will make a dent in its short-term profits:

Dominic Walsh

Majestic Wine doubles investment in customer acquisition to boost returns but will take £2-3m hit on 2019 profits

April 17, 2018

Here’s the agenda:

  • 9.30am BST: UK labour market report
  • 10am BST: The ZEW institute publishes its survey of German economic sentiment
  • 2pm BST: IMF releases its World Economic Outlook

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