Inflation rates fall to a nine month low in January

February 17th, 2009 by admin | Filed under Daily News, Recession, Saving, UK Bank Accounts, UK Banks, savings accounts.

Keyed on by much awaited drops in fuel cost as well as reduced housing costs brought about a fall in the UK inflation rate in January for the first time in almost nine months. A drop in inflation was reported as fuel costs, property rentals, food all fell. Mervyn King Bank of England Governor, instead of being optimistic again voiced his fears that continued drops in inflation could lead to deflation and the need to further ease consumer credit restrictions to stoke up the economy.

The principal contributors to the fall were fuel prices that fell by over fifteen percent, the largest monthly percentage fall since 1997. Crude oil traded below $37 a barrel in New York further increasing the speculation that the World’s largest economies and principal fuel burners demand for fuel continues to push prices down.

The UK car manufacturing sent another message that all was not well with the news that BMW is to cut 850 jobs at their Oxford factory where their Mini car is churned out. Decrease in demand means that BMW will be cutting the weekend shift, to curb production against falling demand for the Great British Mini, which has been in production in some form or other since the nineteen sixties.

On the energy front, the giant BG Group, in the face of strong competition, has upped their bid by 25% to acquire e Energy Resources, the Australian gas company. This bid provides ample evidence of the company’s determination to increase its market share in Australia’s emergent coal bed methane industry. BG’s new bid trumps the latest offer from Australia’s Arrow Energy, which last week raised its offer to A$890m. The new bid values Pure at £453million (A$995milion). On the announcement of the increased offer, BG’s shares fell 0.6 percent (6 pence to 1062 pence.)

Also on the FTSE, the U.K. manufacturer of natural-based chemicals, Croda International suppliers to such major clients as Procter & Gamble Co. are expected to publish their 2008 earnings. On a slightly unoptimistic note, their stock fell a token 0.6 percent (3 pence to 524 pence.)

Due to publish their figures for 2008 are Deveron Plc, makers of collagen sausage casings in the UK. The stock market seemed to have lost their appetite with shares falling 5.5 percent (6.2 pence, to 84 pence.)

Pizza seemed to be doing better, with Domino’s Pizza UK and Ireland Plc rising if only by 0.4 percent (I penny to 226 pence)

The world’s biggest hotel company Intercontinental Hotels Group Plc are also booked in to announce their 2008 earnings. Signs of nervousness abound as their stock fell 2.3 percent (11.25 pence to 475 pence.)

On the stock market, the FTSE 250 index fell by 1.81% or 116.84 points to 6345.23 while the FTSE 100 finished the session down by 1.48 per cent, or 61.16 points, at 4,073.59

Sterling remained stable against the major currencies.

Pound/US dollar 1.4253

Pound/Euro 1. 1282

Pound/Japanese Yen 130.8

Pound/Swiss Franc 1.66765

Wall Street shares had a fair day on trading with the Dow Jones Average remained stable to close at 7850.41. Nasdaq fell 7.35 points to 1534.36

Recent reports showed Japan’s economy contracted once again during the fourth quarter the highest fall since 1974 at an annual rate of 12.7 percent the fall comes after a 13.9 percent drop in exports from the third quarter.

Understandably enough, Shoichi Nakagawa the Japanese finance minister announced his resignation after these disappointing statistics were released. Nakagawa publicly apologised after the opposition party claimed he appeared drunk at the G7 press conference in Rome. The finance minister was quick to apologise for his behaviour and explained that after undergoing a medical examination, he had been diagnosed with a combination of exhaustion, back pain as well as a cold.