Daily business and finance update 17th August 2023
Inflation steps down
Good morning. Today we're talking about the slowdown in inflation, a car insurance giant losing thousands of customers and China’s youth unemployment problem.
Inflation steps down
The UK annual inflation rate dropped sharply to 6.8% last month, down from 7.9% in June. The decline was driven mostly by falling energy prices with a new, lower energy price cap coming into effect in July. There was also a slowdown in food inflation from 17.3% to 14.8%. Separate pay data showed that for the first time in nearly two years, prices are increasing less rapidly than wages, which rose by 8.2% in the three months to June. The combination of prices rises cooling and strong wage growth means the Bank of England is still expected to increase interest rates for the 15th time in a row next month.
Insurance giant sheds customers
Car insurer Admiral lost 380,000 customers in the past six months after raising premiums by 20%. Despite the loss of customers the company still recorded a 4% rise profits to £234m during the period. The car insurance market has been under pressure to increase prices driven by rising claims and repair costs. Research found that 2022 was the industry’s worst performing year in a decade and that for every £1 insurers received in premiums, they paid out £1.10 in claims and costs. The Association of British Insurers said last week that the average agreed premium across the industry in the three months to the end of June was £511 – 21% higher than the same period last year.
China’s youth problem
China’s National Bureau of Statistics said it will stop publishing unemployment data on specific age groups in an apparent attempt to mask its alarming youth jobless rate, which surged to a record 21.3% in June and is expected to rise further. The NBS did, however, release a host of other disappointing financial data that pointed to a gloomy economic outlook. The Chinese economy rebounded strongly after Covid lockdown restrictions eased last year but is now facing issues. The property market is struggling after years of debt-fuelled growth and investment levels are falling. The situation led US President Biden to call China’s economy a “ticking time bomb.”
Rental rises: The rising cost of renting has again hit its highest level since comparable records began in 2016, with strong demand from tenants.
Rail restrictions: Rail fare rises in England will not exceed 9% next year and will be delayed until March, the government has said.
Banking errors: A glitch with Bank of Ireland's online app reportedly allowed customers with no money to transfer funds and withdraw it from an ATM.
How much Michael Burry, the “Big Short” investor who became famous for correctly predicting the epic collapse of the housing market in 2008, has bet on another Wall Street crash.
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