Market Loop - Inflation rises (again)

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17th November 2022

Bite-sized business news from the UK and beyond

Good morning The mascot for the 2024 Paris Olympic Games has been unveiled as… a smiling hat. The Phrygian cap is a symbol of the French Revolution but has raised eyebrows with its resemblance to something else.

Today's stories

Inflation rises (again)
Deliveroo bids farewell to Australia

ECONOMY
Inflation rises (again)

What happened?
UK inflation hit a 41-year high in October of 11.1% from 10.1% the month before, according to official data. The rate was higher than both economists’ expectations and the Bank of England’s forecast of peak inflation.

How did we get here?
The war in Ukraine and the aftermath of Covid have squeezed energy and food supplies therefore increasing their price.

Households are paying, on average, 89% more for their electricity, gas and other fuels. Although overall inflation would have been 13.8% had the government not introduced an energy price guarantee that limited the increase.
Food and non-alcoholic drinks have risen by 16%, highest annual rate since September 1977.

The surprising increase will add pressure on the Bank of England and government to act
The result is more evidence that inflation has been more persistent than the Bank of England expected, so interest rates will have to rise further to get it back to the 2% target.

The prime minister Rishi Sunak said cooling inflation is the main goal of his government ahead of the chancellor Jeremy Hunt’s much-anticipated Autumn Statement unveiling later today. The government has said it will pull back on public spending and raise taxes to dampen demand and prices even though the economy is headed into recession.

Zooming out: The UK picture contrasts with across the pond where there are hopes that inflation has peaked after US prices rose 7.7% in October, the lowest rate since January.

Other stories to keep you in the loop

Vodafone warns of UK price rises and job cuts as inflation bites
Profits swell for Experian amid increased demand for money-saving tools
Elon Musk tells Twitter staff to work long hours or leave
Tesco upgrades ‘reduced to clear’ areas amid customer demand
SSE profits more than triple as UK energy prices soar
US lawsuit launched against failed crypto exchange founder and celebrity backers

ONLINE
Deliveroo bids farewell to Australia

What happened?
Yesterday takeaway app Deliveroo announced it would end operations in Australia blaming “challenging economic conditions” and the “considerable” investment needed to make the business profitable.

How did we get here?
Founded in London in 2013, Deliveroo expanded quickly across the world into 200 cities in 12 countries. The app launched in Australia in 2015 but has struggled to compete with US giants DoorDash and UberEats and UK rival JustEat Takeaway.

This made Deliveroo the number four player compared to the number two or three position it has in its other markets. It therefore concluded that the return on getting a bigger slice of the market couldn’t be justified by the amount investment needed to compete.

Australia accounts for 3% of the company’s total order values and was lossmaking so closing the business should improve overall profitability. However it will leave 120 staff and 15,000 riders without work.

The news follows Deliveroo's exit from the Netherlands only this month in another attempt to cut costs. For most of its existence the app has prioritised growth over profits but since listing on the stock market last year its shifted its focus to growing profits.

Zooming out: Deliveroo shares have lost almost 70% of their value since debuting in March 2021 and since then the company has been dogged by questions on how it will grow in light of the easing of Covid restrictions and return of out-of-home dining.

Now with a recession looming, consumer spending habits could change amid a backdrop of persistently high inflation, leaving households with less disposable income to spend on takeaways.

Stat of the day

The US has fined Google $391m in the largest-ever consumer privacy settlement. The amount equates to less than a day of revenue for the tech giant

Interesting links from around the web

You’re one in 8bn: how you fit into the world population
The taboo of 'selling out' for a better-paying job
In defence of letting some friendships go and putting yourself first

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Market Loop - Inflation rises (again)

Older messages

UK job market under strain

London loses stock market top spot to Paris

Higher taxes ahead for everyone

Covid continues to weigh on UK labour market

Primark warns of ‘most challenging’ economy for many years

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