Good morning. Today we're talking about cooling inflation, Sainsbury’s banking sale and Revolut’s new valuation.

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Big Stories

Inflation hits target

UK inflation has finally dipped back to the Bank of England's desired level of 2%, marking the first time it's reached this target in nearly three years. However, this positive development comes too late to significantly impact Prime Minister Rishi Sunak's political standing ahead of the upcoming election. While it offers a glimmer of hope for the economy, there are still potential hurdles on the horizon. According to energy consultancy LCP Delta, UK households could face a renewed "inflationary sting" if the natural gas market tightens. This concern stems from traders rushing to replenish stockpiles before winter, potentially driving prices up again. The recent decline in inflation is primarily attributed to a decrease in food prices. Despite this positive sign, the Bank of England voted to keep interest rates at a 16 year high of 5.25% but did suggest that a cut may happen in August.

Sainsbury ditches banking

Sainsbury's is selling its core banking business to NatWest in a £125m deal. This move reflects the supermarket’s strategic shift towards prioritising its core grocery and retail activities. The deal includes customer accounts holding unsecured personal loans, credit cards and savings accounts, but excludes Argos financial services, insurance products, ATMs and travel money services offered by Sainsbury's Bank. This follows a similar trend in the supermarket sector, with Barclays acquiring a significant portion of Tesco's banking arm earlier this year for £600m. Through this acquisition, NatWest is poised to gain around 1m new customer accounts, bolstering its deposit base by an estimated £2.6bn. The sale of the banking unit has been on Sainsbury's radar since January, aligning with their decision to exit the banking sector after 27 years.

Revolut reaches new high

Revolut is eyeing a $40bn valuation through a planned share sale. This jump from its 2021 valuation of $33bn would solidify the British fintech as Europe's leading startup and even surpass established banks like NatWest. The success stands out amidst a turbulent fintech market, where rivals like Klarna saw valuations plummet. However, Revolut still awaits a crucial UK banking licence, which could further boost its lending business if granted. Founded in 2015 the company has 40m customers globally, with 9m of them in the UK. It has plans to expand its workforce to 11,500 by the end of 2024.

Elsewhere...

Employee disputes: Four members of the UK's richest family have received prison sentences for exploiting staff brought over from India to work at their Geneva villa.

Back on top: Microsoft has regained the title of the world's most valuable public company just days after it was overtaken by Nvidia.

Product flop: Apple is shutting down Apple Pay Later, its buy now, pay later service, less than a year after launching.

Cap scrap: JPMorgan has become the latest bank to scrap an EU-imposed cap on its UK staff’s bonuses, after rival Goldman Sachs made the same move last month.

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Number of the Day

£3 billion

How much Octopus Energy will pay the government to reimburse the public money it received to take over collapsed energy supplier Bulb.

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