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Straits Times
33 minutes ago
- Straits Times
UK inflation at 18-month high as food, transport costs soar
Consumer prices rose 3.8 per cent in July from a year earlier, up from 3.6 per cent in June and the fastest pace since January 2024. UK inflation climbed to an 18-month high on the back of surging food, transport and hospitality prices, putting the Bank of England under pressure to reconsider the pace of interest-rate cuts. Consumer prices rose 3.8 per cent in July from a year earlier, up from 3.6 per cent in June and the fastest pace since January 2024, the Office for National Statistics said Aug 20. The pickup was forecast by the BOE but exceeded the 3.7 per cent economists were predicting. Services inflation, a closely watched gauge of underlying price pressures, climbed to 5 per cent, above the BOE's 4.9 per cent forecast. The pound erased a drop after the report to trade little changed at US$1.3502. The July reading does little to settle the debate within the BOE over the path of policy after the tightest of decisions this month when rates were cut a quarter point to 4 per cent and Governor Andrew Bailey warned of 'genuine uncertainty' about the next move. The central bank expects inflation to peak at 4 per cent in September, double its 2 per cent target, on the back of higher food costs but to drop back after that. July's increase was also driven by what may prove to be temporary factors, including the biggest jump in air fares in 24 years due to the timing of the summer holidays, and moves in global food commodity markets. Policymakers will have to balance the risk of sticky inflation as the British public, scarred by three years of sharply increasing prices, demand compensating wage rises against fears the economy is stuttering and the BOE's own forecast that inflation will ease. The pickup in services and food prices will increase 'fears of inflation persistence at the Bank of England,' according to S&P Global Market Intelligence economist Raj Badiani. 'This will harden the assessment of several members of the MPC. They are likely to voice concerns that interest rates are falling too rapidly.' Top stories Swipe. Select. Stay informed. Singapore 18 persons nabbed and 82 vapes seized in HSA ops in Raffles Place and Haji Lane Singapore Woman trapped between train doors: Judge rules SBS Transit '100% responsible' Singapore COE premiums up in all categories except motorcycles; Cat A price climbs 2.5% to $104,524 Singapore Grab users in Singapore shocked by fares of over $1,000 due to display glitch Singapore MyRepublic's policy of not imposing download speed limits to stay after takeover: Starhub Singapore Emergency broadcast system to alert S'pore public to disasters via their mobile phones: Edwin Tong Life S'pore bands mark milestones with gigs: Silver Strings at 60, Mel & Joe at 55 and Lovehunters at 40 Singapore Singapore indie cinema The Projector owes over $1.2m to creditors Money markets kept wagers on BOE interest-rate cuts broadly steady, seeing around a 40 per cent chance of another reduction by year-end. A full quarter-point cut had been expected earlier this month. Gilts pared earlier gains, leaving the two-year yield lower by one basis points at 3.97 per cent, while the 10-year yield was flat at 4.74 per cent. Traders have curbed their bets on future rate cuts since the narrower-than-forecast decision on Aug. 7 saw some policymakers warn of the risk of second-round effects on wages and prices as consumers try to recover lost spending power. Subsequent figures showing the economy and labour market holding up better than feared have added to the case for caution. Policymakers will have two more months of data to consider before deciding whether to continue their once-a-quarter rate-cutting path in November. The figures add to evidence that firms are responding to Chancellor of the Exchequer Rachel Reeves' bumper tax and minimum-wage increases in April by passing on the billions of pounds in extra costs to consumers. Food and non-alcoholic drink prices, which shape inflation expectations more than other consumer items, rose 4.9 per cent on the year, the fastest pace since February 2024. The increase was driven by beef, chocolate, orange juice and coffee, suggesting global factors are also at play. Higher inflation undermines Prime Minister Keir Starmer's promise to improve living standards for 'working people' during Labour's first term. Instead a recovery in real incomes is fizzling out as resurgent inflation collides with a cooling labour market, with Ms Reeves' tax-raising budget in October blamed by critics for causing both. Commuters will be hit hard as rail fares are now due to rise 4.8 per cent next year, under the arrangement that they increase in line with the July reading for the retail prices index of inflation. In a statement, Ms Reeves said 'we're a long way from the double-digit inflation we saw under the previous government, but there's more to do to ease the cost of living.' The ONS said the monthly increase in air fares was the biggest since comparable records began in 2001 and was likely to have been due to the timing of the school holidays. They rose 30.2 per cent between June and July, compared with 13.3 per cent in 2024. The higher cost of fuel also lifted inflation and hotels and restaurant prices were 3.2 per cent higher in the year to July, up from 2.6 per cent in the 12 months to June. The ONS said there was no evidence that the Oasis reunion tour had affected the numbers. 'Excluding airfares, package holidays and education – a measure the BOE has in the past called 'core' services inflation – as well as accommodation services, which tend to be volatile, annual services inflation eased to 4.9 per cent from 5.1 per cent in June, based on our estimates,' economists Dan Hanson and Ana Andrade said. BLOOMBERG
Straits Times
33 minutes ago
- Straits Times
STI rises 0.1% despite US big tech sell-off
Sign up now: Get ST's newsletters delivered to your inbox SINGAPORE – Local shares limped higher on Aug 20 as nervy investors kept a wary eye on the tech sell-off on Wall Street overnight. The cautious mood left the benchmark Straits Times Index (STI) up just 0.1 per cent or 3.35 at 4,219.54 with gainers edging out losers 277 to 256 on subdued trade of 1.48 billion securities worth $1.49 billion. Wall Street injected some anxiety into local trade after falls in big-tech shares sent the Nasdaq down 1.5 per cent as investors switched out of the sector. It was the Nasdaq's biggest fall this month and left long-time market favourites Nvidia 3.5 per cent lower and Oracle off 5.8 per cent. The S&P 500 took a hit as well, declining 0.6 per cent, while the Dow industrials added a paltry 0.1 per cent. Major regional indexes were mixed. South Korea's Kospi fell 0.7 per cent, Japan's Nikkei 225 slipped 1.5 per cent and Malaysian shares dipped 0.1 per cent but the ASX 200 in Sydney eked out a 0.3 per cent gain despite a 28 per cent plunge in buildings material giant James Hardie. The STI's top gainer was real estate developer Hongkong Land, up 2.5 per cent to US$6.11, while Jardine Matheson Holdings led the losers, down 2.2 per cent to US$58.15, after being the biggest blue-chip winner on Aug 19. Top stories Swipe. Select. Stay informed. Singapore 18 persons nabbed and 82 vapes seized in HSA ops in Raffles Place and Haji Lane Singapore Woman trapped between train doors: Judge rules SBS Transit '100% responsible' Singapore COE premiums up in all categories except motorcycles; Cat A price climbs 2.5% to $104,524 Singapore Grab users in Singapore shocked by fares of over $1,000 due to display glitch Singapore MyRepublic's policy of not imposing download speed limits to stay after takeover: Starhub Singapore Emergency broadcast system to alert S'pore public to disasters via their mobile phones: Edwin Tong Life S'pore bands mark milestones with gigs: Silver Strings at 60, Mel & Joe at 55 and Lovehunters at 40 Singapore Singapore indie cinema The Projector owes over $1.2m to creditors The local banks all rose: DBS added 0.28 per cent to $50; UOB advanced 0.43 per cent to $35; and OCBC put on 0.78 per cent to $16.89. Swissquote Bank senior analyst Ipek Ozkardeskaya said: 'The sell-off across US big tech names dampened the market mood, triggered largely by mounting doubts over the AI boom.'
Business Times
33 minutes ago
- Business Times
Buffett effect still holds as UnitedHealth soars through August
[NEW YORK] The Warren Buffett effect is proving true once again, spurring UnitedHealth Group's reversal this month and giving the Dow Jones Industrial Average a push towards its first closing high since last year. Buffett's Berkshire Hathaway revealed last week that it bought a stake in the health insurer in the second quarter. UnitedHealth shares, which lost more than 50 per cent from the start of 2025 through the end of July, have been on a tear this month, rising more than 20 per cent in August alone and far outperforming any other company in the blue-chip index during that stretch. The stock has added more than 300 points to the Dow in August, accounting for more than 40 per cent of its monthly gain. It has been a welcome boost for the stock-price-weighted benchmark, which hit an intraday record on Tuesday but has yet to close at a new all-time high and has been trounced by other major equity indexes, like the S&P 500 and Nasdaq 100, this year. 'There wasn't a single piece of good news basically this whole year specific to UnitedHealth,' Morningstar analyst Julie Utterback said. 'So having a company like Berkshire Hathaway investing competitively in a managed firm that was attractively valued, that's really a nice vote of confidence.' The 'Buffett Effect' essentially refers to a stock market phenomenon where share prices rise when the legendary investor takes a stake and fall when he exits a position. In this case it's notable because until very recently UnitedHealth was the biggest drag on the Dow this year. Then it reversed direction and quickly went from worst to first. 'Really tough year' 'Investors in UnitedHealth have had a really tough year,' said Utterback, who tracks the stock's decline to early December, when former executive Brian Thompson was fatally shot outside an investor conference in New York. The stock is still down 40 per cent in 2025 and is trading at a little more than US$300. Utterback has a buy rating and US$400 price target on the shares. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Thompson's murder, which was a targeted attack aimed at UnitedHealth's leadership, helped send the Dow on its longest losing streak since the 1970s. At the same time, the insurer's stock fell from the biggest weight in the 30-member index to seventh. But since the Berkshire Hathaway stake was revealed after the market closed on Aug 14, Wall Street has turned incrementally positive on UnitedHealth. And more broadly, investors are starting to see some momentum from the entire health-care sector. Jonathan Krinsky, chief market technician at BTIG, says he's 'sticking with health care for a more defensive posture' and because it's the best-performing sector in the market in August.A As for UnitedHealth, it may be more attractive as a longer-term position. 'If you can take a five-year view (on UnitedHealth), you likely will do well,' analysts at BofA Securities wrote in a note to clients on Monday that was subtitled 'Berkshire is in, should you be?' The bank raised also its price target on the stock to US$325 from US$290. And when it comes to dragging the Dow to a new closing high, the company still needs some help. 'The rest of the stocks still need to be able to rally,' said Matt Maley, chief market strategist at Miller Tabak +, though he added that removing the biggest drag on the index is a positive sign. 'The DJIA is something the individual investor watches more closely than the pros.' BLOOMBERG
