Aldi & Lidl to the rescue

Tuesday, 7th March: The FTSE100 opened today with a rebound from yesterday at +0.10% supported by the further weakness in sterling, but remained flat throughout the rest of the afternoon. The FTSE250 however, struggled to keep up opening at -0.04%. At the lead of the FTSE250 fallers was Aggreko, provider of modular, mobile power, and related situations, having previously powered events such as the Olympics and World Cup, they traded -11% lower at 937p after experiencing highs of around 1708p during the same period in the previous year.

Grocery inflation has doubled since February in the UK, as Kantar data has shown that food staples such as butter, tea and fish are all rising. Following a set period of grocery price deflation, which ran for around 30 consecutive periods from September 2014 to December 2016, prices have gradually been rising in the 12 weeks to January 2017. The grocery inflation isn’t bad news for everyone though, as more people are embracing the local discounters over the chain of major supermarkets. The likes of Aldi and Lidl have shown growth of +12.9% and 13% respectively, whilst Tesco and Morrison’s have experienced declines of more than -1%.

House price growth however, is expected to take a turn in the opposite direction, as the annual British house price has finally cooled to its weakest since July 2013 as a result of tighter consumer spending. After experiencing a drop in house prices of -1.1% in January, February experienced a marginal increase of 0.1%. The housing sector isn’t the only one which has been affected by Brexit’s impact on consumer spending, as it appears that several non-food categories are showing a similar trend of declines due to changes in consumers’ buying behaviour. Retail sales within the motor industry, department stores, and even in electronics have all reflected the same dip, yet, the dip in the British car market is likely to be temporary, and is expected to pick back up in March 2017 after the release of 2017 number plates.

Meanwhile, the dollar has continued to strengthen by 0.1% according to the WSJ Dollar Index, which measures the dollar against 16 other currencies. This was largely as a result of talks over the potential raise in short-term interest rates which is due to be confirmed this month. At the time of writing, USD/GBP is +0.40%, USD/EUR is +0.07%, and USD/JPY is +0.13%.

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