Today's business and finance round up 28th July 2022
Consumer businesses pass on higher costs to customers
28th July 2022
Bite-sized business news from the UK and beyond
Good morning Tomorrow $1bn will be up for grabs in the US Mega Millions draw. The jackpot will be the fourth largest lottery prize ever in the country. What are the odds of winning? The chance of matching all six numbers is roughly 1 in 303 million. Good luck!
The only way is up: Consumer businesses pass on higher costs to customers
Preparing for the worst: Lloyds gets ready for economic downturn
CONSUMERConsumer businesses pass on higher costs to customers
McDonald’s announced that the price of a cheeseburger will be increasing for the first time in 14 years, relinquishing its 99p price tag taking it to £1.19. The fast food giant said it will also raise the price of other menu items by 10-20p this year.
Reckitt Benckiser, the British maker of Dettol and Nurofen, hiked its prices by almost 10% in the three months to 30 June, saying customers were willing to accept increases on branded items and further rises were on the way.
Unilever, the owner of brands ranging from Marmite to Dove soap and Domestos bleach, has raised its prices by 11% in recent months and expects to do so again throughout the year.
Other stories to keep you in the loop
Tory leadership: Rishi Sunak supporters deny U-turn in row over VAT cut
UK energy bills forecast to hit £3,850 as Russia cuts gas supply further
US interest rates see second 0.75 point rise to tackle inflation
London pint prices hit £8 as squeeze hurts Marston’s
Facebook owner Meta reports first ever revenue drop
Greggs and Primark on a roll with second fashion collaboration
BANKSLloyds gets ready for economic downturn
Yesterday Lloyds Banking Group announced it had set aside nearly £400m to cover a possible increase in customers defaulting on loans in a rising interest rates environment.LBG includes not only Lloyds Bank but a suite of brands like Halifax and Bank of Scotland. This makes it the UK’s largest mortgage lender and holder of savings deposits, its performance is therefore generally seen a reflection of the health of the economy.During the height of the pandemic in 2020 British banks set aside billions of pounds to cover potential losses from unpaid debts as the economy ground to a halt. But things didn’t turn out so bad, due in part to government interventions like the furlough scheme, and loan defaults remained low. As a result banks released most of these charges last year.Now with the outlook for the economy again looking uncertain, LBG is getting ready in case customers struggle to repay their debts.Since December the Bank of England’s base rate has risen from 0.25% to 1.25% to combat rising inflation. Rising rates are typically good news for bank finances, since banks can charge borrowers more for loans and mortgages, which in turn increases their net interest margin – a key measure of profitability and growth.For the time being LBG says that there are no signs of rising defaults and that staff were being trained to help struggling families manage their finances.Fellow banks Barclays and NatWest report results this week and the amount they set aside for loan defaults will be closely watched.
Stat of the day
England's Euro 2022 semi-final victory over Sweden was watched by a peak television audience of 9.3 million - the biggest of the tournament so far
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