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You can find the current article at its original source at https://www.theguardian.com/business/live/2019/dec/18/brexit-cliff-edge-markets-pound-inflation-food-petrol-business-live
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| UK inflation at three-year low despite rising chocolate prices - business live | UK inflation at three-year low despite rising chocolate prices - business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news | Rolling coverage of the latest economic and financial news |
| Wall Street has opened cautiously, as traders await the historic vote on whether to impeach Donald Trump (liveblog here). | |
| Shares are a little higher, with the Dow Jones industrial average gaining 39 points or 0.14% to 28,306 - back towards yesterday’s intraday high. | |
| The tech-focused Nasdaq has hit a record high, up 17 points or 0.2% at 8,840. | |
| A lot of people have been citing December 2020 as the big Brexit deadline. But actually, June could be the real cliff edge date. | |
| That the last date for the UK to request an extension, EU insiders insist. The withdrawal agreement stipulates that the transition can be extended by “one or two years”, but that would probably involve the UK committing more money for the EU budget. | |
| My colleague Jennifer Rankin reports that Brussels believes Johnson is serious about not seeking such an extension: | |
| But.. this cliff-edge wouldn’t be as serious as crashing out of the EU without a withdrawal agreement: | |
| Back in the markets, sterling is weakening further as traders keep fretting about Brexit. | Back in the markets, sterling is weakening further as traders keep fretting about Brexit. |
| The pound has lost more than half a cent against the US dollar today, to $1.3060 - or more than four cents below its post-election spike. | The pound has lost more than half a cent against the US dollar today, to $1.3060 - or more than four cents below its post-election spike. |
| JP Morgan has warned there’s a 25% risk that the UK and EU fail to agree a trade deal by the end of 2020. This is “uncomfortably high”, it says. | JP Morgan has warned there’s a 25% risk that the UK and EU fail to agree a trade deal by the end of 2020. This is “uncomfortably high”, it says. |
| But the bank also believes there’s a 50% chance that a deal is reached, and only a 20% possibility of the transition period being extended. | But the bank also believes there’s a 50% chance that a deal is reached, and only a 20% possibility of the transition period being extended. |
| David Lidington, who was effectively deputy prime minister under Theresa May, has predicted that a ‘core’ trade deal will be agreed by the end of December 2020. | David Lidington, who was effectively deputy prime minister under Theresa May, has predicted that a ‘core’ trade deal will be agreed by the end of December 2020. |
| Speaking of the Bank of England... the central bank has outlined new climate emergency stress tests. | Speaking of the Bank of England... the central bank has outlined new climate emergency stress tests. |
| They will examine whether UK banks and insurance companies are prepared for the impact of climate change. It will consider a range of scenarios, including temperature rises of up to 4 degrees celsius (double the Paris climate agreement). More here: | They will examine whether UK banks and insurance companies are prepared for the impact of climate change. It will consider a range of scenarios, including temperature rises of up to 4 degrees celsius (double the Paris climate agreement). More here: |
| Professor Costas Milas of Liverpool University argues that UK interest rates are likely to be cut next year - whether Brexit goes smoothly or not. | Professor Costas Milas of Liverpool University argues that UK interest rates are likely to be cut next year - whether Brexit goes smoothly or not. |
| He writes: | He writes: |
| But what if the trade deal negotiations hit hurdles? | But what if the trade deal negotiations hit hurdles? |
| As a knowledgable and well-read lot, I’m sure you’ll have NO TROUBLE at all tackling our Christmas quiz. | As a knowledgable and well-read lot, I’m sure you’ll have NO TROUBLE at all tackling our Christmas quiz. |
| It’s just been published, covering some of the biggest business news stories of the year: | It’s just been published, covering some of the biggest business news stories of the year: |
| Inflation is rising particularly briskly in the North of England, according to think tank NIESR. | Inflation is rising particularly briskly in the North of England, according to think tank NIESR. |
| NIESR (the National Institute of Economic and Social Research) has calculated that ‘underlying inflation’ rose by 1% across the UK (this measure excludes ‘extreme price movements’). | NIESR (the National Institute of Economic and Social Research) has calculated that ‘underlying inflation’ rose by 1% across the UK (this measure excludes ‘extreme price movements’). |
| But while this underlying inflation rose by 1.5% in the North, it only picked up by 0.7% in the South East, and by 0.9% in Scotland. That’s based on 130,088 “locally collected” prices. | But while this underlying inflation rose by 1.5% in the North, it only picked up by 0.7% in the South East, and by 0.9% in Scotland. That’s based on 130,088 “locally collected” prices. |
| NIESR economist Janine Boshoff said: | NIESR economist Janine Boshoff said: |
| A quick dig into November’s inflation report shows that the price of some types of food have risen sharply. | A quick dig into November’s inflation report shows that the price of some types of food have risen sharply. |
| Chocolate, for example, is 4.3% more expensive than a year ago. | Chocolate, for example, is 4.3% more expensive than a year ago. |
| Ice-creams and ‘edible ices’ cost a chunky 6.1% more (which is intriguing, as November isn’t really peak season). | Ice-creams and ‘edible ices’ cost a chunky 6.1% more (which is intriguing, as November isn’t really peak season). |
| Yoghurt is up 12.5%, margarine by 15.9%, while pasta and couscous is 17.7% more expensive than November 2018. | Yoghurt is up 12.5%, margarine by 15.9%, while pasta and couscous is 17.7% more expensive than November 2018. |
| In the drinks section, cocoa and powdered chocolate was 7.7% more expensive than a year ago, while fruit and vegetable juices were 8.9% pricier. | In the drinks section, cocoa and powdered chocolate was 7.7% more expensive than a year ago, while fruit and vegetable juices were 8.9% pricier. |
| Here’s a sector-by-sector breakdown of the November inflation report: | Here’s a sector-by-sector breakdown of the November inflation report: |
| OVERALL CONSUMER PRICES: 1.5% over the last year | OVERALL CONSUMER PRICES: 1.5% over the last year |
| Food and non-alcoholic beverages: 2.1% | Food and non-alcoholic beverages: 2.1% |
| Alcoholic beverages and tobacco: 1.9% | Alcoholic beverages and tobacco: 1.9% |
| Clothing and footwear: unchanged | Clothing and footwear: unchanged |
| Housing, water, electricity, gas and other fuels: 1.2% | Housing, water, electricity, gas and other fuels: 1.2% |
| Furniture, household equipment and maintenance: 1.2% | Furniture, household equipment and maintenance: 1.2% |
| Health: 2.9% | Health: 2.9% |
| Transport: 0.8% | Transport: 0.8% |
| Communication: 3.3% | Communication: 3.3% |
| Recreation and culture: 1.5% | Recreation and culture: 1.5% |
| Education: 2.7% | Education: 2.7% |
| Restaurants and hotels: 2.4% | Restaurants and hotels: 2.4% |
| Miscellaneous goods and services: 1.9% | Miscellaneous goods and services: 1.9% |
| Economists agree that Britain’s low inflation means there’s no chance that the Bank of England will raise interest rates soon. | Economists agree that Britain’s low inflation means there’s no chance that the Bank of England will raise interest rates soon. |
| The BoE sets rates tomorrow, at its last meeting of 2019, but Jing Teow, economist at PwC, doesn’t expect fireworks: | The BoE sets rates tomorrow, at its last meeting of 2019, but Jing Teow, economist at PwC, doesn’t expect fireworks: |
| Yael Selfin, chief economist at KPMG UK, predicts that inflation will stay low next year - potentially allowing the BoE to cut borrowing costs. | Yael Selfin, chief economist at KPMG UK, predicts that inflation will stay low next year - potentially allowing the BoE to cut borrowing costs. |
| Chancellor Sajid Javid has welcomed today’s inflation figures, saying it will help families handle the cost of Christmas. | Chancellor Sajid Javid has welcomed today’s inflation figures, saying it will help families handle the cost of Christmas. |
| However, prices are still rising -- so households will suffer if their income hasn’t kept pace with inflation. | However, prices are still rising -- so households will suffer if their income hasn’t kept pace with inflation. |
| Wages are still rising faster than inflation in the UK, but the gap has narrowed. | Wages are still rising faster than inflation in the UK, but the gap has narrowed. |
| Yesterday we learned that total pay growth (including bonuses) slowed to 3.2%, from 3.6%, with basic pay growth dipping from 3.6% to 3.5%. | Yesterday we learned that total pay growth (including bonuses) slowed to 3.2%, from 3.6%, with basic pay growth dipping from 3.6% to 3.5%. |
| Chocolate prices are a classic example of ‘shrinkflation’, especially at Christmas time. | Chocolate prices are a classic example of ‘shrinkflation’, especially at Christmas time. |
| Last week, ITV News showed how some favourite festive confectionary tins, such as Roses and Quality Street, have shrunk by 40% in the last decade. That has allowed them to keep the sticker price low - but obviously consumers are getting less for their money. | Last week, ITV News showed how some favourite festive confectionary tins, such as Roses and Quality Street, have shrunk by 40% in the last decade. That has allowed them to keep the sticker price low - but obviously consumers are getting less for their money. |
| The Office for National Statistics tries to keep a close eye on this. Earlier this year, it reported that 206 products shrank in size in 2018, while 79 got bigger. | The Office for National Statistics tries to keep a close eye on this. Earlier this year, it reported that 206 products shrank in size in 2018, while 79 got bigger. |
| So if a chocolate tub gets significantly smaller, but its price doesn’t, that pushes inflation up. | So if a chocolate tub gets significantly smaller, but its price doesn’t, that pushes inflation up. |
| UK house price growth has hit its lowest level in seven years, as prices continue to fall in London. | UK house price growth has hit its lowest level in seven years, as prices continue to fall in London. |
| Across the country, the average house price increased by 0.7% in the 12 months to October to £233,000. That’s the lowest growth since September 2012. | Across the country, the average house price increased by 0.7% in the 12 months to October to £233,000. That’s the lowest growth since September 2012. |
| Prices rose strongly in Yorkshire and the Humber (+3.2%) but fell in the capital (-1.6%) and the North East (-1%). | Prices rose strongly in Yorkshire and the Humber (+3.2%) but fell in the capital (-1.6%) and the North East (-1%). |
| On a regional basis, English house prices lagged behind the rest of the UK. | On a regional basis, English house prices lagged behind the rest of the UK. |
| England: +0.5% year-on-year | England: +0.5% year-on-year |
| Scotland: 1.4% | Scotland: 1.4% |
| Wales: 3.3% | Wales: 3.3% |
| Northern Ireland: 4.0% | Northern Ireland: 4.0% |
| ONS Head of Inflation Mike Hardie points out that concert tickets, and package holidays, also became pricier last month: | ONS Head of Inflation Mike Hardie points out that concert tickets, and package holidays, also became pricier last month: |
| Food prices rose in November, particularly for chocolate, according to today’s inflation report. | Food prices rose in November, particularly for chocolate, according to today’s inflation report. |
| The Office for National Statistics explains: | The Office for National Statistics explains: |
| Recreation and culture costs rose at a faster rate last month, but that was balanced by smaller rises in hotel bills and tobacco prices. | Recreation and culture costs rose at a faster rate last month, but that was balanced by smaller rises in hotel bills and tobacco prices. |
| Women’s clothes price inflation also slower, the ONS says: | Women’s clothes price inflation also slower, the ONS says: |
| Britain’s inflation rate remains at its lowest since November 2016, as this chart shows: | Britain’s inflation rate remains at its lowest since November 2016, as this chart shows: |
| Just in: UK inflation stuck at a three-year low of 1.5% last month. | Just in: UK inflation stuck at a three-year low of 1.5% last month. |
| That’s a little higher than expected, but still comfortably below the Bank of England’s target of 2%. | That’s a little higher than expected, but still comfortably below the Bank of England’s target of 2%. |
| More to follow.... | More to follow.... |
| Big news in the auto sector: Peugeot and Fiat Chrysler have agreed to merge, creating the world’s four-biggest carmaker. | Big news in the auto sector: Peugeot and Fiat Chrysler have agreed to merge, creating the world’s four-biggest carmaker. |
| My colleague Jasper Jolly has the details: | My colleague Jasper Jolly has the details: |
| Newsflash: German business confidence has risen, as Europe’s largest economy continues to swerve a recession. | Newsflash: German business confidence has risen, as Europe’s largest economy continues to swerve a recession. |
| The IFO think tank has reported that Germany’s business leaders are more confident about future prospects, and that current economic conditions have brightened a little this month. | The IFO think tank has reported that Germany’s business leaders are more confident about future prospects, and that current economic conditions have brightened a little this month. |
| IFO estimates that the German economy may grow by 0.2% in the current quarter, as firms enter 2020 with “more confidence’. | IFO estimates that the German economy may grow by 0.2% in the current quarter, as firms enter 2020 with “more confidence’. |
| Here’s the details: | Here’s the details: |
| Business climate index: UP to 96.3 in December, from 95.1 | Business climate index: UP to 96.3 in December, from 95.1 |
| Current conditions: UP to 98.8, from 98 | Current conditions: UP to 98.8, from 98 |
| Business expectations: UP to 93.8 from 92.3 | Business expectations: UP to 93.8 from 92.3 |