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

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

‘Frustration is in the air as UK inflation continues to prove stubborn. The slight rise in the headline rate to 4% is the last move companies and households wanted to see, as it pushes the prospect of interest rate cuts further down the line.

‘There had been high hopes that with fuel costs falling and food price rises slowing, the headline rate of inflation would keep easing. However, rises in tobacco prices due to increases in duty helped pushed back up the headline rate.

‘Although the cost of raw materials did fall by 2.8%, the cost of goods leaving factories ticked up by 0.1%. With inflation still double the Bank of England’s target, policymakers are still likely to stay ultra cautious about the prospects for interest rate cuts this year.

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

‘The tight labour market here in the UK will also be a cause for concern, despite signs that wage growth is easing. Downwards pressure on inflation is still expected, with the World Bank forecasting global growth to slow, and the UK economy at the edge of recession, this should act as a further drag on demand.

‘But the Bank of England is not expecting inflation to reach 2% until the end of 2025. So, although cuts are being eyed in 2024, more patience will be needed.’

888 Holdings expects annual profits to come in at the low end of market expectations following a year-over-year fall in fourth quarter revenue.

The Gibraltar-headquartered bookmaker is expected to report adjusted core profit for 12 months ending December 2024 of £377million.

Per Widerström, CEO of 888, said:

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

‘We are now taking rapid actions to position the Group for future success, reducing our overhead costs and freeing up funds to invest in growth based upon our new strategy and value creation plan.

‘The financial performance of the Group must improve, and the actions we are taking will build a leaner, more agile, and more effective organisation structure, as well as establishing a more effective management of the customer and product life cycle.

‘These plans support material value creation and significantly higher profits over the coming years.

‘I have been working hard with the Board, our strengthened executive team, and the talented people across the business to refine our strategic framework, which is being translated into a value creation plan, and am confident that we are poised to deliver deleveraging and strong shareholder returns in the coming years.’

GSK has raised £978million from a discounted stake sale in Haleon, cutting its shareholding to 4.2 per cent in the world’s largest standalone consumer healthcare firm.

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

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

‘The monthly headline rate of CPI edged up by 0.4%, the same rate as November, a consequence of retailers increasing prices following the Black Friday sales, but this rise disguises continued falling food prices seen across autumn.

‘Although prices are still rising in aggregate and remain above the Bank of England’s desired 2% target, the general direction of travel indicates that the economy will begin to blossom again as winter turns to spring.

‘When the Bank releases its overhauled forecasts, estimates will likely reflect this encouraging trend in domestic price pressures. This data has come too soon 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 take heart from the strong likelihood that price pressures will continue to subside in the months to come.

‘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 sufficient to drive inflation down to target far sooner than the Bank’s current expectations.’

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

The appointment of Auchincloss, who headed BP’s finances under Looney, is seen by analysts and investors as a sign the board is seeking to continue BP’s strategy aimed at slashing carbon emissions, building up its renewables and clean fuel capacity and cutting oil and gas output by 2030.

Auchincloss, 53, became interim CEO after Looney resigned on 12 September for failing to disclose relationships with employees, throwing the energy giant into turmoil.

Helge Lund, chair of BP, said:

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

‘Many already know Murray well, and few know bp better than he does. His assured leadership, focus on performance and delivery, and deep understanding of the opportunities and challenges in the energy transition will serve bp well as we continue our disciplined transformation to an integrated energy company.’

George Lagarias, chief economist at Mazars:

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

‘Price rises are a symptom of persistent geopolitical instability and competition, a theme that will likely stay with us for most of the year. Having said that, we don’t have enough data yet which would suggest a major third inflation wave.

‘We believe that we are now finished with the linear drop in inflation and entering a phase of more volatile price movements.

‘Inflation numbers from the US, UK and EU should pour some well-deserved cold water at buoyant traders who are pricing rate cuts in the first quarter of 2024 and help bring market inflation expectations back 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 forecasts in November but will nonetheless knock back expectations of an early interest rate cut.

‘The picture is still not clear overall, as this set of inflation data follows yesterday’s news that the annual increase in earnings is slowing nicely.

‘All eyes will remain on economic data until there is some certainty that we are heading back to target inflation levels.’

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

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