BUSINESS LIVE: Shop price inflation flat; Aldi UK and Lidl GB festive sales soar

Richard Hunter, head of markets at Interactive Investor:

‘In the UK, the tepid performance which dogged returns for much of the year also saw some improvement as the possibility of interest rate cuts in 2024 eased some of the pressure which had been forced on investors.

‘The more domestically focused FTSE250 enjoyed a strong finish, ending 2023 ahead by 4.4% despite having been below the waterline for most of the year.

‘The more recent revelation that the UK could already be in recession following a contraction in growth for the third quarter, coupled with a sharp drop in inflation in November add to the possibility that rate cuts will need to be in sharp focus at the Bank of England as the year progresses.

‘The premier index also saw the benefit of December momentum following through, opening the year slightly higher and adding to the gain of 3.8% achieved throughout 2023. The FTSE100 remains some way off the record highs of over 8000 posted in February, although the upcoming reporting season could provide some further relief.

‘Over the next couple of weeks attention will turn towards retailers and supermarkets as they provide updates on trading over the festive period, and indeed these stocks have helped propel the index in early trade with prices marked up in anticipation of a successful Christmas season.’

More bank branches are set to close this year as lenders continue withdrawing from the High Street.

Lenders have already announced at least 189 branches will shut in 2024, figures show.

Investors face another turbulent year ahead.

Politics will dominate 2024 to a remarkable degree, especially while the tragic conflicts in Ukraine and Gaza remain unresolved.

The boss of Microsoft has performed a dramatic U-turn after previously claiming the UK was ‘bad for business’.

Brad Smith launched a scathing attack in April last year after the tech giant was blocked from buying Call of Duty maker Activision for £60billion by British regulators.

At the time, the Competition and Markets Authority (CMA) warned the deal would lead to Microsoft having a ‘stranglehold’ over the fast-growing cloud gaming industry.

The British arm of Aldi reported an 8 per cent rise in sales in the four weeks to 24 December to top £1.5billion of revenue for the period for the first time.

Meanwhile its smaller rival Lidl GB posted an even better 12 per cent increase in the same period.

Both chains said they recorded their busiest ever day of trading on Friday 22 December, with more than 2.5 million customers coming through the doors of Aldi on the day.

Annual UK shop price inflation was flat month-on-month at 4.3 per cent in December, but shoppers were able to cheer an easing of the rate of food price increases.

While non-food product inflation jumped from 2.5 to 3.1 per cent in December, marking the end of Black Friday discounts, food price inflation fell from 7.7 to 6.7 per cent for the month.

Chief Executive of the British Retail Consortium, which compiles the data, Helen Dickinson said:

‘Overall shop price inflation remained steady in December. Households did have reason to celebrate as food inflation fell for the eighth consecutive month thanks to retailers’ efforts to bring down prices in the run-up to Christmas.

‘There was cause for merriment as prices of wine, port and sherry fell on the month. Non-food products had a more challenging December, with price inflation rising again following retailers’ investment in November Black Friday discounting and ahead of the January sales.

‘Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead. New border checks for EU imports, hundreds of millions more on business rates bills from April. Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.’

Interest rates look set to tumble this year in a boost for millions of borrowers worried about mortgage payments.

According to bets on financial markets, the Bank of England will cut rates six times in 2024, taking them from a 15-year high of 5.25 per cent today to 3.75 per cent by Christmas.

That would be a major boost for borrowers needing to remortgage and first-time buyers getting onto the housing ladder.