Business

UK inflation falls to 2.3%, raising questions over interest rate cuts

Published

7 months ago

May 22, 2024

UK inflation has dropped to 2.3% in April, marking its lowest level in nearly three years. However, the decline fell short of analysts’ expectations, dampening hopes for an imminent interest rate cut by the Bank of England.

City analysts had anticipated a reduction to 2.1%, closer to the Bank’s 2% target. This discrepancy led markets to adjust their forecasts, now predicting that the Bank’s current rate of 5.25% may not be reduced until August, rather than next month as previously speculated.

The Office for National Statistics (ONS) reported that the decrease from March’s 3.2% was primarily due to lower energy and food costs. The last time inflation was this low was in July 2021. Significant contributions to the drop included a record 27% fall in electricity and gas prices over the past year and a modest 2.9% annual rise in food and soft drink prices, the smallest increase since November 2021.

Illustrating the ongoing strain on household budgets, furniture retailers reduced prices by 0.9% between March and April, while overall goods prices dropped by 0.8% month-on-month. However, annual services inflation, reflecting inter-company charges, remained stubbornly high at 5.9%, only slightly down from March’s 6%.

Despite the overall fall in the consumer prices index (CPI), the ONS noted that higher property rents and mortgage costs kept the alternative CPIH measure, which includes housing costs, elevated at 3% year-on-year. Petrol and diesel prices rose last month, although the price of Brent crude has recently stabilised around $83 (£65) per barrel.

KPMG UK’s chief economist, Yael Selfin, suggested that the chance of an interest rate cut next month had diminished. “Falling inflation nears the Bank of England’s target but may not suffice for an early rate cut,” she stated. Echoing this sentiment, Paula Bejarano Carbo of the National Institute of Economic and Social Research noted that core inflation, which excludes volatile food and energy prices, remains high at 3.9%. Combined with robust wage growth, this persistence could compel the Bank’s monetary policy committee to maintain rates.

Prime Minister Rishi Sunak heralded April’s CPI figure as a “major moment for the economy, with inflation back to normal,” asserting that it validated the government’s economic strategy. Conversely, Shadow Chancellor Rachel Reeves argued that it was premature for the Conservatives to celebrate, highlighting the ongoing pressures of soaring prices, mortgage bills, and taxes.

In the eurozone, inflation held steady at 2.4% in April.

Separate ONS data indicated a larger-than-expected rise in public borrowing for April, with the monthly deficit reaching £20.5bn. Despite a decrease in debt payments, the high cost of servicing government debt exceeded expectations, potentially ruling out pre-election tax cuts.

Economic adviser Martin Beck from the EY Item Club described the public finance figures as disappointing, suggesting that continued higher borrowing costs would likely prevent any significant fiscal easing before the next general election.

Welsh Conservative Shadow Minister for Economy and Energy, Samuel Kurtz MS, praised the inflation drop, attributing it to the UK Conservative Government’s effective economic policies. He called on the Welsh Labour Government to support the economy by fully implementing business rates relief and reforming growth taxes.

Paul Butterworth, CEO of Chambers Wales South East, South West, and Mid, noted that while the reduction in inflation was significant, it remained above the Bank of England’s target. He expressed hope that the continued downward trend might prompt an interest rate cut soon.

Meanwhile, the British Association for Counselling and Psychotherapy (BACP) warned that despite the fall in inflation, the cost of living crisis continues to severely impact mental health. Their recent survey revealed that 74% of respondents felt their mental health was worsened by the crisis, with particularly high impacts on those with pre-existing conditions, women, ethnic minorities, and lower-income households.

BACP’s Director, Dr Lisa Morrison Coulthard, emphasised the need for government action to address these mental health challenges. The BACP has proposed a 13-point action plan to improve access to mental health services, stressing the importance of funding and support for vulnerable populations.

As the nation grapples with economic and mental health pressures, the government’s response to these intertwined issues will be crucial in the coming months.

Business

Ferry Terminal ‘extremely busy’ due to ongoing Holyhead closure

Published

11 hours ago

December 21, 2024

Tom Sinclair

PEMBROKE DOCK Ferry Terminal has been experiencing significant congestion today as ferry services remain under immense pressure following the closure of Holyhead Port earlier this month.

The disruption, caused by storm damage, has rerouted ferry traffic through Pembrokeshire, leading to long queues and crowded facilities at the terminal.

The Herald can confirm that it has been very busy today with cars, lorries, and foot passengers queuing in large numbers. Staff are working tirelessly to manage the influx, directing vehicles and assisting passengers as they prepare to board the heavily booked ferries.

A spokesperson for the Port of Milford Haven said: “We are working closely with ferry operators and local authorities to ensure traffic flows as smoothly as possible, but the sheer volume of vehicles is causing unavoidable delays.”

Travelers are being urged to arrive early for their sailings and to remain patient as the terminal operates at full capacity.

Both Stena Line and Irish Ferries have increased capacity on their Pembrokeshire routes, deploying larger vessels, including the Stena Adventurer and the MV James Joyce, to handle the surge in demand.

From our position at the terminal, our photographer has captured photos showing long lines of vehicles, groups of foot passengers carrying luggage, and port staff coordinating efforts to ease congestion.

Authorities are advising non-essential travelers to consider rescheduling their journeys where possible and to monitor updates from ferry operators closely.

(Photos: Martin Cavaney/Herald)

Business

52 homes to be built in Roch as scheme gets final sign-off

Published

2 days ago

December 20, 2024

Bruce Sinclair - Local Democracy Reporter

THE FINAL stage of approval for a near-£10m Pembrokeshire residential development of 52 homes has been given the go-ahead.

Back in April, members of Pembrokeshire County Council’s planning committee backed an application by Wakefield Pembrokeshire Ltd for the development, which includes four one-bed affordable housing units, on land near Pilgrims Way, Roch.

18 objections to the scheme were received, raising concerns including an “inadequate” affordable housing level, it being a high density development for a rural area, a loss of green space, the size of some of the homes, and pressures on existing services and facilities, and fears it may lead to an increase in second homes.

Nolton & Roch Community Land Trust (N&RCLT) has raised its concerns about a lack of affordable homes at the development, calling for a 20 per cent affordable homes element, as recommended by policy.

An officer report for members, recommending conditional approval, said: “It is apparent that the proposed development is not fully policy compliant, insofar as it cannot deliver the indicative 20 per cent affordable housing sought [by policy].

“However, a substantial positive social impact will arise through the provision of housing, including four one-bed affordable housing units, in meeting identified needs for both market and affordable housing.

“Financial obligations identified to mitigate adverse impacts arising from the proposed development cannot be met in full. However, [policy] acknowledges that in such circumstances contributions may be prioritised on the basis of the individual circumstances of each case.”

Speaking at the meeting, agent Gethin Beynon said the project had a “significant economic value” of around £10m, and the local applicant had “a sense of stewardship to the local community,” offering affordable housing and community infrastructure towards highways and education.

Approval was delegated to the council’s head of planning to approve the application, subject to the completion of a Section 106 planning obligation, making community financial contributions.

The Section 106 agreement was recently agreed, with the application now formally approved.

Business

World of engineering and welding SPARCs interest in Ysgol Harri Tudur’s female learners

Published

2 days ago

December 20, 2024

Richard Lewis

AN EVENT hosted by Ledwood Engineering gave girls from Year 8 and 9 at Ysgol Harri Tudur first-hand experience of the world of engineering recently.

Engineering is a booming sector in Pembrokeshire with a high demand for skilled workers in exciting career pathways associated with the development of low carbon and renewable energy industry and the Celtic Freeport.

The young women heard from industry experts on the importance of engineering in Pembrokeshire, and had hands on experience using a welding simulator, at the company’s Pembroke Dock site.

The learners are part of the County’s SPARC (Sustainable Power and Renewable Construction) initiative aimed as inspiring and empowering young females to consider careers in science, technology, engineering and mathematics (STEM) pathways where females are under-represented in the workforce.

SPARC is funded through an alliance comprising Blue Gem Wind, Ledwood Engineering, Port of Milford Haven, RWE Renewables, Pembrokeshire County Council, Pembrokeshire College and the Swansea Bay City Deal.

Mrs Laura Buckingham, SPARC practitioner at Ysgol Harri Tudur said: “Our learners had a fantastic experience at Ledwood Engineering. They were given lots of advice by industry experts on the different career options and pathways within the engineering sector.

“They appreciated the opportunity to ask their questions and found the session very informative. Having the chance to trial their welding skills on the simulator was an experience they continue to talk about and has definitely piqued their interest.”

Poppy Sawyer, Year 8 SPARC learner added: ‘It was a really good trip. Talking to the different people there has helped me know more about the jobs we could get which will be very useful when making choices for my future.”

“They helped us a lot by giving us lots of information. We were able to look around and try welding. It was really fun,” added Tianna Marshall, Year 8 SPARC learner.

The Regional Learning and Skills Partnership also launched its Explore Engineering interactive website at the event.