Good morning. Today we're talking about rising UK inflation, Apple’s latest product launch and a record-breaking crypto heist.

Big Stories

Inflation ticks up

UK inflation unexpectedly surged to a 10-month high of 3% in January, exceeding forecasts and presenting a challenge for the Bank of England. Inflation had reached a more than three-year low of 1.7% in September but prices have increased since then driven primarily by rising transport and food costs. The news complicates the Bank's efforts to manage inflation and stimulate economic growth. Core inflation, excluding volatile items like food and energy, also increased, further signaling underlying price pressures. While the Bank anticipates inflation to peak later in the year before gradually declining to its 2% target by 2027, the latest figures raise questions about the trajectory of price pressures. Despite some positive news regarding wage growth outpacing inflation, concerns remain about the potential impact on employment as businesses grapple with higher employment costs arriving in April.

Apple’s big reveal

Apple unveiled its latest budget-friendly smartphone, the iPhone 16e, priced at $599 and available at the end of February. This new model signals a significant shift in Apple's device strategy. Notably, the home button is gone, replaced by Face ID, bringing the 16e in line with Apple's higher-end models. Crucially, the 16e boasts the processing power to run Apple Intelligence, the company's AI suite, making it accessible to a wider audience. The 16e also marks the debut of Apple's in-house cellular chip, the Apple C1. This move signals a potential break from relying on Qualcomm for cellular modems, a change that could save Apple billions. A successful rollout of the Apple C1 in the 16e could lead to its integration into the flagship iPhone 17 later this year, with a full transition to Apple's own chip expected within two years. This strategy reflects Apple's efforts to regain market share, particularly in regions like China, where it experienced its worst year for smartphone sales since 2016. By offering a more affordable option with advanced features, Apple aims to broaden its appeal and strengthen its competitive position globally.

Crypto heist

Cryptocurrency exchange Bybit has been targeted in a massive hack, potentially the largest digital asset theft in history, with $1.5bn in Ethereum stolen. The Dubai-based exchange, serving over 60m users, confirmed that a single Ethereum wallet was compromised, with its contents transferred to an unknown address. Bybit reassured customers that other wallets remained secure and withdrawals were proceeding, although the sheer volume of withdrawal requests has caused some delays. Despite the scale of the theft, Bybit's CEO pledged to fully reimburse affected users, even if the stolen funds are not recovered. While the perpetrators remain unidentified, speculation points towards potential involvement of North Korean state-sponsored hacking groups, known for similar large-scale cryptocurrency heists. The incident underscores the ongoing security challenges facing the rapidly evolving cryptocurrency industry and highlights the vulnerability of even major exchanges to sophisticated cyberattacks.

Elsewhere...

Troubled waters: Hong Kong’s CKI Infrastructure has submitted a £7bn bid for a majority stake in the embattled utility Thames Water.

New address: Kentucky Fried Chicken has faced backlash after announcing plans to move its corporate headquarters from the state after which it is named to Texas.

Government pressure: Elon Musk has asked US government workers to list their accomplishments from the past week or resign - the latest development in the Trump administration's efforts to scale back the federal workforce.

Apple vs UK: Apple will no longer offer customers in the UK its most advanced, end-to-end security encryption feature for cloud data storage - following a row with the government.

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Number of the Day

$320 billion

What Alphabet, Microsoft, Meta and Amazon are expected to spend on AI this year. Most of the cash will go towards large infrastructure projects like data centres.

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