Daily Business Live
Inflation jumps above target; retail on growth path; GDP falls
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5pm: Market defies rise in inflation
Investors were left digesting news that inflation jumped past the Bank of England’s 2% target in May for the first time in nearly two years, and awaited the latest policy announcement from the Federal Reserve.
The FTSE 100 ended the session up 0.17% at 7,184.95, while the FTSE 250 slipped 0.06% to 22,617.66.
10.15am: FM apologises for not listening
First Minister Nicola Sturgeon has apologised to the business community which has accused her of not communicating effectively.
Speaking at the National Economic Forum she pledged more support for businesses during the enforced restrictions.
9.40am: GDP falls
The Scottish economy contracted by 1.9% during January to March 2021.
Over the year, compared to the first quarter of 2020, the economy has contracted by 5.4%.
During the first quarter output in the construction sector grew by 2.6%, output in production grew by 1.3%, and output in the services sector contracted by 3.0%.
8.30am: Markets higher
The FTSE 100 rose in line with forecasts, up 24 points to 7,196.53 in early trade.
7am: Inflation leaps
The cost of living index rose to a higher than expected 2.1% in the the 12 months to May, as prices increased for clothes, fuel, food and drink.
The latest Consumer Price Index measure of inflation compared to 1.5% in the year to April, according to the Office for National Statistics, and is now above the Bank of England’s 2% target.
Analysts say the sharper than expected rise is a result of supply not keeping up with demand as consumer confidence rises and leisure markets reopen.
Traders are turning attention to the outcome of the Federal Reserve meeting in the US (see below).
7am: Omega results
Omega, the Scottish medical diagnostics company, will issue its financial results for the year ended 31 March 2021 on Tuesday 13 July.
Retail on slow path to growth
Retail sales in Scotland fell again last month, though there are signs of a slow recovery.
Total sales decreased by 3.6% on a 2-year basis compared with May 2019, when they had decreased by 3.1%.
Ewan MacDonald Russell, head of policy & external affairs at the Scottish Retail Consortium, said: “Retailers continue to benefit from the relaxation of lockdown restrictions and the return to shops with May showing the best retail sales figures in 15 months.
“However, despite evidence of pent up demand coming through sales still failed to break into positive territory, remaining below the comparable May 2019 figures.
“Hopefully retail is now on a path back to growth – however it’s clear the industry is not yet out of the woods, and with little sign that the lost retail sales of the past 15 months will be recouped.
“With sales still negative and the cost of operating under the current restrictions onerous retailers will continue to struggle to be profitable.”
See also: Shops oppose New Year’s Day closure call
Traders in the US marked stocks lower as they await the latest decision on interest rates from the US Federal Reserve.
It will give projections for growth, inflation, and an indication on the direction of interest rates.
The Dow Jones Industrial Average closed down 0.27%, while the S&P 500 dropped 0.2% and the Nasdaq Composite fell 0.71%.
Asia was also quieter, with Japan’s Nikkei 225 down 0.5% while Hong Kong’s Hang Seng dropped 0.26%.
Spread-betting firm IG expected the FTSE 100 to open 8 points higher after ending Tuesday’s session 26 points ahead at 7,172.
On currency markets, the pound was relatively unchanged against the dollar, up 0.02% at $1.408, although UK inflation figures due later today could provide some catalysts for movement.