LIVE BUSINESS: Inflation rises to 4%; BP confirms Auchincloss as CEO; GSK sells stake in Haleon

Susannah Streeter, head of money and markets at Hargreaves Lansdown:

‘Frustration is in the air as UK inflation remains stubborn. The slight increase in the headline rate to 4% is the latest move that businesses and households wanted to see, as it pushes the prospect of interest rate cuts even further into the future.

‘There were high hopes that, with fuel costs falling and food price growth slowing, the overall rate of inflation would continue to decline. However, increases in tobacco prices due to duty increases helped push down the headline rate.

‘Although the cost of raw materials fell by 2.8%, the cost of goods leaving factories increased by 0.1%. With inflation still at double the Bank of England’s target, policymakers are likely to remain extremely cautious about the prospects for interest rate cuts this year.

‘Concerns remain about the effect on prices of delays in goods arriving from Asia, given that attacks in the Red Sea are disrupting around 20% of global shipping.

‘The tightness of the labor market here in the UK will also be a cause for concern, despite signs that wage growth is slowing. Downward pressure on inflation is still expected, with the World Bank forecasting a slowdown in global growth and the UK economy on the brink of recession, which should act as a further drag on demand.

“But the Bank of England does not expect inflation to reach 2% until the end of 2025. So, although cuts are planned for 2024, more patience will be needed.”

888 Holdings expects full-year earnings to be at the lower end of market expectations following a year-over-year decline in fourth-quarter revenue.

The Gibraltar-based bookmaker is expected to post an adjusted core profit for the 12 months ending December 2024 of £377m.

Per Widerström, CEO of 888, said:

‘I joined the business at an exciting and important time. There are clear opportunities to unlock our significant potential, but as a company we know that in the future we must be more proactive in adapting to changes in regulation and technology.

‘We are now taking swift action to position the Group for future success, reducing our overall costs and freeing up funds to invest in growth based on our new strategy and value creation plan.

‘The Group’s financial performance must improve, and the actions we are taking will build a more efficient, agile and effective organizational structure, as well as establishing more effective customer and product lifecycle management.

‘These plans support the creation of significantly greater material value and profits in the years ahead.

“I have been working hard with the Board of Directors, our strengthened executive team and talented people across the company to refine our strategic framework, which is being translated into a value creation plan, and I am confident that we are prepared to achieve a deleveraging and solidity”. profitability for shareholders in the coming years.’

GSK has raised £978m from the sale of a discounted stake in Haleon, reducing its stake to 4.2 per cent in the world’s largest independent consumer healthcare company.

The drugmaker sold around 300 million shares of its spun-off unit at a price of 326 pence per share, compared with Haleon’s closing price on Tuesday of 333.6 pence.

Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services:

‘The monthly headline CPI rate rose 0.4%, the same rate as in November, as retailers increased prices following the Black Friday sales, but this increase masks the continued decline in food prices observed during the fall.

‘Although prices continue to rise overall and remain above the Bank of England’s desired 2% target, the general direction of travel indicates that the economy will begin to flourish again as winter gives way to spring.

‘When the Bank publishes its revised forecasts, the estimates will likely reflect this encouraging trend in domestic price pressures. This data has come too early to capture any potential upside risk associated with shipping disruptions in the Red Sea, but this will likely be reflected in next month’s figures and will likely make little more than a marginal difference.

‘The Bank’s rate setters will be encouraged by the strong likelihood that price pressures will continue to ease in the coming months.

“Energy regulator Ofgem is also expected to deliver a sharp drop in the utility price cap in April, which will ease pressures on British households and may well be enough to bring inflation down to target well before the current expectations of the Bank”.

BP has confirmed Murray Auchincloss as permanent CEO, four months after he was given the interim role following the sudden resignation of Bernard Looney.

The appointment of Auchincloss, who ran BP’s finances during the Looney administration, is seen by analysts and investors as a sign that the board is seeking to continue BP’s strategy aimed at reducing carbon emissions, increasing its energy capacity renewables and clean fuels and reduce oil and gas production in 2030.

Auchincloss, 53, became interim CEO after Looney resigned Sept. 12 for failing to disclose his relationships with employees, plunging the energy giant into turmoil.

Helge Lund, president of BP, said:

‘Since September, BP’s board has undertaken a comprehensive and highly competitive process to identify BP’s next CEO, considering in detail a number of high-calibre candidates. The board strongly agrees that Murray was the outstanding candidate and is the right leader for BP.

‘Many already know Murray well, and few know BP better than him. “His confident leadership, his focus on performance and delivery, and his deep understanding of the opportunities and challenges in the energy transition will serve bp well as we continue our disciplined transformation towards an integrated energy company.”

George Lagarias, chief economist at Mazars:

‘It should come as no surprise that British inflation rose in December. Similar data from the US and EU, as well as other forward-looking reports, have suggested that prices were ripe for a recovery.

‘Price increases are a symptom of persistent geopolitical instability and competition, an issue that will likely remain with us for most of the year. That said, we still don’t have enough data to suggest a major third wave of inflation.

‘We believe we have ended the linear decline in inflation and have entered a phase of more volatile price movements.

“The US, UK and EU inflation figures should throw some well-deserved cold water on optimistic traders who are pricing in rate cuts in the first quarter of 2024 and help inflation expectations from the market return to planet Earth.

Neil Birrell, Chief Investment Officer at Premier Miton Investors:

‘Inflation in the UK jumped in December, meaning the annual rate rose to 4%. This is still well below the Bank of England’s November forecast, but will still dash expectations of an early interest rate cut.

‘The overall picture is still unclear, as this set of inflation data follows yesterday’s news that annual profit growth is slowing considerably.

“All eyes will remain on the economic data until there is some certainty that we are returning to target inflation levels.”

Consumer price inflation rose for the first time in 10 months in December, jumping from 3.9 per cent to 4 per cent, new data from the Office for National Statistics shows.

The rise was a shock against forecasts that the rate would be cut to 3.8 percent and will give the Bank of England pause for thought as it considers interest rate cuts this year.