Business
UK inflation rises to 3.4%, driven by tobacco and airfares
Inflation has risen to 3.4% in the year to December, driven by higher tobacco prices and airfares, according to official figures.
The increase in average prices across the UK economy – the first in five months – was just above expectations, with many economists predicting only a slight uptick to 3.3%.
The cost of airfares was a contributor “likely because of the timing of return flights over the Christmas and New Year period”, the Office for National Statistics (ONS) said. It also reflected an increase in tobacco duty introduced in late November.
It is the last set of monthly inflation figures released before the Bank of England’s decision on interest rates in February.
In addition to tobacco and transport prices, “rising food costs, particularly for bread and cereals, were also an upward driver,” said ONS chief economist Grant Fitzner.
“These were partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases.”
In response to the figures, Chancellor Rachel Reeves said her priority was cutting the cost of living, citing measures in her November Budget including a freeze to rail fares and prescription charges.
“Money off bills and into the pockets of working people is my choice.
“There’s more to do, but this is the year that Britain turns a corner,” Reeves said.
Inflation in the UK is a measure of the Consumer Prices Index, which is a virtual basket of hundreds of everyday goods and services selected by the ONS that includes things like bread, fruit, furniture and different items of clothing.
The prices of these items are tracked by the ONS over the previous 12 months, and the basket is regularly updated to reflect shopping trends.
Major disruption to energy supplies threatens to push up prices for consumers and businesses around the world.
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Saudi Aramco jumped the most since April 2023 on Sunday as the Iran war entered its second week, prompting supply disruptions that may send oil prices higher when global markets reopen. Shares of the state-backed oil giant climbed as much as 4.9% in Riyadh before paring gains to close up 4.1%, on the first day of trading for the stock since Brent crude prices topped $90 a barrel on Friday.Brent may climb further after UAE and Kuwait started reducing oil production amid a near-closure of Strait of Hormuz waterway, adding to interruptions affecting worldwide energy supply and exports. “For Aramco, we believe that the gain in oil prices would offset a decline in exports,” said Junaid Ansari, head of research and strategy at Kamco Investment Co. “We also believe that Aramco should be able to re-route a bulk of its shipments to the Red Sea. It’s just about logistics and handling the excess capacity.” Aramco has been redirecting oil cargoes to Red Sea facilities on Saudi Arabia’s west coast to avoid the Strait of Hormuz.
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Gold braces for volatile week as Middle East tensions escalate: Analysts | India Business News – The Times of India
After witnessing sharp swings last week, gold prices are expected to remain volatile in the coming days as investors track escalating tensions in the Middle East and key global economic data releases, analysts said on Sunday.Market participants are likely to track developments in the conflict involving Israel and Iran, as any escalation could support safe-haven demand for bullion, while signs of easing tensions may trigger sharp profit booking in the market.“Focus will again be on developments in the Middle East. Any further escalation could be positive for gold prices, but signs of de-escalation may lead to sharp selling,” Pranav Mer, vice president, Commodity and Currency Research at JM Financial Services, told the news agency PTI.Silver is also witnessing heightened volatility, though it is currently in a consolidation phase, analysts noted.“Silver is trading with high volatility but remains capped due to consolidative movements in gold and industrial metals such as copper and zinc,” Mer added.In the domestic market, bullion futures saw sharp swings during the past week. On the Multi Commodity Exchange (MCX), silver plunged by Rs 14,359, or 5.08 per cent, while gold slipped Rs 470, or 0.3 per cent.According to Prathamesh Mallya, deputy vice president, Research (Non-Agri Commodities and Currencies) at Angel One, gold traded within a broad range of Rs 1.59 lakh to Rs 1.70 lakh per 10 grams last week.Geopolitical tensions, strong demand from Asian markets, continued purchases by central banks, elevated US Treasury yields and a firm US dollar are among the key factors currently shaping bullion prices, he said.Globally, silver futures on Comex dropped by USD 8.98, nearly 10 per cent, during the week, while gold prices declined by USD 89.2, or 1.7 per cent.Analysts noted that gold ended the week in negative territory as investors shifted towards alternative safe-haven assets such as the US dollar, Swiss franc and government bonds, even as ongoing geopolitical tensions helped limit deeper losses.Investors will also monitor key economic indicators in the coming week, including inflation and trade data from China, inflation readings from the US, Germany and India, as well as US consumer sentiment and the Personal Consumption Expenditures (PCE) price index, which could influence global growth expectations and monetary policy outlook.
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