Latest news with #JoeNellis
Yahoo
25-04-2025
- Business
- Yahoo
Sunny high streets buoyed by 0.4% rise in retail spending in March
The spell of fine Spring weather in March gave a boost to the High Street with bumper business for fashion stores and garden shops helping to deliver a 0.4% rise in retail sales. The Office for National Statistics (ONS) said sales were up 1.6% across the first quarter of the year as consumers felt buoyed by increasing real wages after the long cost of living crisis. It was the third consecutive monthly rise and the strongest quarterly increase since summer 2021. The growth in March was stronger than expected in the City after a mediocre Christmas. But it is in keeping with a string of better that forecast economic figures through the first quarter of the year. However, economists fear that may have been brought to a juddering halt by an 'awful April' of higher taxes and wages costs for business, increases in bills for consumers, and the tariff chaos unleashed by President Trump. The ONS said that 'clothing stores were the subsector with the strongest growth with retailers mentioning good weather boosting sales'. Clothing and shoes sales were up 3.7%. Other sectors doing well were antique shops and auctions and 'stores selling garden supplies. Retailer comments pointed to the good weather'. March was the third sunniest on record with prolonged spells of warm dry weather that brought out the shoppers. Commentators welcomed the robust figures but warned of tougher times ahead. Professor Joe Nellis, economic adviser at accountancy firm MHA, said: 'This is likely to be a false dawn, and we should not expect this to continue. 'Inflationary pressures remain high and retailers and consumers alike will be acting in anticipation of changes from April outlined in the Autumn Budget. 'The outlook for the retail sector looks worrying for the rest of the year and beyond, as stagnating domestic growth and international uncertainty continue to bear down on consumer confidence. 'The sector is an incredibly important part of the UK economy, employing nearly 3 million people and generating revenue of £517 billion in 2024, and the Government will need the sector firing if the economy is to achieve the necessary reboot.' But Oliver Vernon-Harcourt, head of retail at consultants Deloitte, said: 'Yet another unexpected rise in retail sales may indicate a turning point for retailers. This marks a third consecutive month of sales growth for the first time since the summer of 2021. 'The retail sector is proving resilient, even with increasing costs for both businesses and consumers. The arrival of spring sunshine seems to be behind the uplift in sales, as wardrobes were updated and socialising outside the home encouraged spending both in store and online.' Phil Monkhouse, UK country manager at financial services firm Ebury, said: 'Retailers enjoyed a surprise uplift in March, defying expectations of a slowdown thanks to the warmer weather boosting clothing and other non-food sales. Despite ongoing economic pressures, consumer resilience appears to have held up, offering a timely lift for the sector as we head into the spring season. 'However, risks remain firmly in play. Uncertainty around Trump's proposed tariffs and the threat of a global trade war continue to cloud the outlook and could pour cold water over the consumer spending spree that we have seen in the last few months. ' 'These external pressures risk reigniting challenges that could squeeze household spending power and business costs alike. The upcoming National Insurance increase in April will likely only add to the strain.' Sagar Shar, associate Partner at consultants McKinsey & Company, said: 'Mother's Day and the spring sunshine saw retail sales rise by 0.4% in March. A positive surprise given that Easter hopped over into April this year – meaning March didn't benefit from the holiday lift. 'It also marks the largest three-month rise in sales volumes since July 2021 – a sign there is some underlying resilience in shopper behaviour and the big discounts in the early part of the quarter brought back consumers.' Sign in to access your portfolio
Yahoo
25-02-2025
- Business
- Yahoo
Inflation and interest rates predictions: What it means for your money in 2025
Hopes of interest rates coming down quickly this year appear to be fading amid rising taxes and economic uncertainty in the UK. Inflation may no longer be at double digits and the cost of living measure even managed to hit the 2 per cent target last year, which prompted interest rate cuts in August and November. But despite an interest rate cut in February and the cost of borrowing figure now being at 4.5 per cent, there are concerns that inflation may now be heading the wrong way and further rate cuts could be pushed back. Inflation measures the cost of goods and services in the UK. This includes everything from your energy bills to your food shop. It is measured by the consumer prices index (CPI) and calculated by the Office for National Statistics (ONS), which revealed a figure of three per cent for January, up from 2.5 per cent in December. Laith Khalaf, head of investment analysis at AJ Bell, said: 'Inflation is now one per cent away from target and heading in the wrong direction, and consumers better buckle up for prices to trend higher throughout this year. 'The Bank of England reckons inflation will hit 3.7 per cent in the third quarter, and that's without a potential tariff shock stemming from US trade policy. The chancellor's decision to raise national insurance and the national living wage from April will no doubt feed into the inflationary dynamic.' Joe Nellis, an economic adviser at accountancy firm MHA, adds that increases in household utility bills will provide an even greater uplift on prices. He said: 'From April, the national average household water bill will increase by £123 a year to £603, a considerable uptick of 26 per cent, and the cap on energy bills is expected to rise in the same month.' Tuesday's announcement shows the cost for the average household being an additional £9.25 a month for energy. Craig Rickman, personal finance expert for interactive investor, added: 'The VAT hike on private school fees is already starting to bite, while the employer national insurance increase and national minimum wage rise are set to kick in from April. Many businesses have warned these additional costs will force them to raise prices.' With inflation remaining sticky, experts warn that the Bank of England may be more reluctant about further interest rate cuts. That is despite the Bank cutting interest rates in February. Rickman said the Bank of England's Monetary Policy Committee has plenty to consider when it next meets to set interest rates on 20 March. He said: 'The Bank has alternated between reductions and holds since it kickstarted the rate-cutting process in August 2024 and after voting to slash the bank rate a couple of weeks ago, it seems this trend will continue with a hold the most likely outcome next month.' Nicholas Hyett, investment manager at Wealth Club, added: 'Making matters worse is the substantial uptick in core inflation – which strips out food and energy prices and is considered a better measure of domestically generated inflation. With core inflation nearly twice the Bank of England's target we see little chance the Bank starts cutting rates again any time soon.' Khalaf said the markets are pricing in two further rate cuts this year, but added: 'There are risks to the market's view that rates will move lower throughout this year. At 5.9 per cent, pay growth is high and seems to be on a rising trend, which may be pumped up by the rise in the National Living Wage. 'A strong dollar and trade tariffs could also add to inflationary pressures.' For these reasons, Khalaf suggests cutting rates remains a risky move. He said: 'To cut rates in the coming months, the Bank of England would need to do so in the face of what it admits will be rising inflation. Of course, the Bank must look to the longer term when it comes to monetary policy, but cutting rates while inflation is heading in the wrong direction is still a pretty sticky wicket.' Higher inflation could mean interest rates remain at their relatively high levels. This would be a blow for anyone looking to buy a house or remortgage as mortgage lenders may be reluctant about cutting pricing or offering more competitive deals. Savers, who have benefited from rates being at 15-year highs, could continue to benefit although many of the best deals have been disappearing in recent months. There are still plenty of savings accounts offering above four per cent, however. Additionally, higher or rising inflation may eat into your returns. Dean Butler, managing director for retail direct at Standard Life, said: 'For borrowers and mortgage holders, the prospect of higher-for-longer interest rates will be frustrating. 'However, for savers, an extended period of elevated rates provides an opportunity. Easy-access cash savings deals at or just below five per cent remain available, but as inflation picks up it will more aggressively erode real returns. Shopping around for the best rates remains crucial.' As inflation races away from the UK's two per cent target, Rickman said it offers a timely reminder to investors and savers to make sure their money is working as hard for them as possible. He said: 'If inflation outpaces the return you receive, your wealth will erode in real terms. If not kept in check over long periods, this can have a punishing impact on your financial future. 'With tax year end fast approaching, one simple task is to fight inflation to make sure you're using the most of your tax wrappers, such as pensions and ISAs. Paying less is one of the most effective ways to guard against the impact of price rises as it means you get to keep more of any growth and income, helping your money to grow faster." When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results. Sign in to access your portfolio
The Independent
25-02-2025
- Business
- The Independent
Inflation and interest rates predictions: What it means for your money in 2025
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. Hopes of interest rates coming down quickly this year appear to be fading amid rising taxes and economic uncertainty in the UK. Inflation may no longer be at double digits and the cost of living measure even managed to hit the 2 per cent target last year, which prompted interest rate cuts in August and November. But despite an interest rate cut in February and the cost of borrowing figure now being at 4.5 per cent, there are concerns that inflation may now be heading the wrong way and further rate cuts could be pushed back. Is the inflation rate rising? Inflation measures the cost of goods and services in the UK. This includes everything from your energy bills to your food shop. It is measured by the consumer prices index (CPI) and calculated by the Office for National Statistics (ONS), which revealed a figure of three per cent for January, up from 2.5 per cent in December. Laith Khalaf, head of investment analysis at AJ Bell, said: 'Inflation is now one per cent away from target and heading in the wrong direction, and consumers better buckle up for prices to trend higher throughout this year. 'The Bank of England reckons inflation will hit 3.7 per cent in the third quarter, and that's without a potential tariff shock stemming from US trade policy. The chancellor's decision to raise national insurance and the national living wage from April will no doubt feed into the inflationary dynamic.' Joe Nellis, an economic adviser at accountancy firm MHA, adds that increases in household utility bills will provide an even greater uplift on prices. He said: 'From April, the national average household water bill will increase by £123 a year to £603, a considerable uptick of 26 per cent, and the cap on energy bills is expected to rise in the same month.' Tuesday's announcement shows the cost for the average household being an additional £9.25 a month for energy. Craig Rickman, personal finance expert for interactive investor, added: 'The VAT hike on private school fees is already starting to bite, while the employer national insurance increase and national minimum wage rise are set to kick in from April. Many businesses have warned these additional costs will force them to raise prices.' When will interest rates be cut? With inflation remaining sticky, experts warn that the Bank of England may be more reluctant about further interest rate cuts. That is despite the Bank cutting interest rates in February. Rickman said the Bank of England's Monetary Policy Committee has plenty to consider when it next meets to set interest rates on 20 March. He said: 'The Bank has alternated between reductions and holds since it kickstarted the rate-cutting process in August 2024 and after voting to slash the bank rate a couple of weeks ago, it seems this trend will continue with a hold the most likely outcome next month.' Nicholas Hyett, investment manager at Wealth Club, added: 'Making matters worse is the substantial uptick in core inflation – which strips out food and energy prices and is considered a better measure of domestically generated inflation. With core inflation nearly twice the Bank of England's target we see little chance the Bank starts cutting rates again any time soon.' Khalaf said the markets are pricing in two further rate cuts this year, but added: 'There are risks to the market's view that rates will move lower throughout this year. At 5.9 per cent, pay growth is high and seems to be on a rising trend, which may be pumped up by the rise in the National Living Wage. 'A strong dollar and trade tariffs could also add to inflationary pressures.' For these reasons, Khalaf suggests cutting rates remains a risky move. He said: 'To cut rates in the coming months, the Bank of England would need to do so in the face of what it admits will be rising inflation. Of course, the Bank must look to the longer term when it comes to monetary policy, but cutting rates while inflation is heading in the wrong direction is still a pretty sticky wicket.' What do higher rates and inflation mean for your money? Higher inflation could mean interest rates remain at their relatively high levels. This would be a blow for anyone looking to buy a house or remortgage as mortgage lenders may be reluctant about cutting pricing or offering more competitive deals. Savers, who have benefited from rates being at 15-year highs, could continue to benefit although many of the best deals have been disappearing in recent months. There are still plenty of savings accounts offering above four per cent, however. Additionally, higher or rising inflation may eat into your returns. Dean Butler, managing director for retail direct at Standard Life, said: 'For borrowers and mortgage holders, the prospect of higher-for-longer interest rates will be frustrating. 'However, for savers, an extended period of elevated rates provides an opportunity. Easy-access cash savings deals at or just below five per cent remain available, but as inflation picks up it will more aggressively erode real returns. Shopping around for the best rates remains crucial.' As inflation races away from the UK's two per cent target, Rickman said it offers a timely reminder to investors and savers to make sure their money is working as hard for them as possible. He said: 'If inflation outpaces the return you receive, your wealth will erode in real terms. If not kept in check over long periods, this can have a punishing impact on your financial future. 'With tax year end fast approaching, one simple task is to fight inflation to make sure you're using the most of your tax wrappers, such as pensions and ISAs. Paying less is one of the most effective ways to guard against the impact of price rises as it means you get to keep more of any growth and income, helping your money to grow faster." When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
