Economists have warned that a rise in interest rates is likely before the end of the year in the event that the current spike in factory output prices continues. High petrol prices have caused manufacturers to absorb rising energy and raw materials prices, with the main being transferred to consumers, stoking fears of a rise in inflation. A five percent rise in year-on-year retail prices in March out-paced analyst expectations, causing them to refigure the probability that the Bank of England will raise rates earlier.

The Halifax Building Society, Group has released its house price index, showing that house prices rose by 1.1 percent in March, partially reversing the 1.6 percent decline in February. The average price for the first quarter of 2010 finished 0.6 percent higher than the same period in 2009. A spokesman for Halifax pointed out that the return of stamp duty on lower-priced homes as well at the severe weather had combined to create a negative effect on house prices in the first two months of the year.

The Society of Motor Manufacturers and Traders (SMMT) have revealed as increase in new car sales by 26.6 percent during March. March is typically a strong month for new car sales, regularly accounting for a fifth of annual sales in the UK due to the new registration plate. The SMMT predicts that the end of the government scrappage scheme will result in a nine per cent fall in total sales for the year. A spokesman for the SMMT, also pointed out that the UK motor industry has enjoyed a better than anticipated first quarter of 2010 while the coming months likely to remain challenging with registrations of new cars expected to dip. In a related statement, the SMMT recently revealed that the number of vehicles in the UK are at an all time low.

The remaining British motorists pulling will be helping to take part in another record breaking attempt from this week onwards, how much it costs too fill their tank. A spokesman for the AA has speculated that petrol prices are about to hit (and pass) the 120 pence a liter mark, with the previous high being 119.7 pence high seen in July 2008, when crude oil was coasting more than $147.00 a barrel..

Industry sources have rushed to point out that the increase is partly a result of soaring wholesale costs, with the price of oil hitting an 18-month high of $85 a barrel, a third less than it cost during the previous high, although the pound was much stronger them and the effects of Chancellor Alistair Darling’s latest duty rise in last month’s Budget of 1 pence a liter.

In April, 2009, petrol cost 92.44 pence a liter.

Postal operator UK Mail has announced that revenues of £388 million for the financial year up to March 31 despite a drop in demand for their services caused by the financial crisis. After the announcement UK Mail’s share price rose 21.5 pence to 333.5 pence, up 28 percent over the past year.

The number of passengers that flew with budget airline EasyJet has increased by 13.5% on a year-on-year basis. EasyJet flew 3.96 million passengers in March 2010, 13.5 percent more than the 3.49 million carried in March 2009 with rival budget airline Ryanair also reporting a 13 percent rise to 5.3 million for the same period. A spokesman for EasyJet projected that the company had benefited from the British Airways strike, as well recently increased its number of flights across Europe.

Marks & Spencer have reported a 5.1 percent fourth-quarter sales increase at the retailer, ahead of becoming non-executive chairman in May. The figures, reported by outgoing executive chairman Sir Stuart Rose, have surpassed analysts’ expectations with sales driven by strong performance in the group’s formalwear and knitwear divisions. Rose in a somewhat controversial final report called for "greater clarity on economic policy and how this will impact our customers individually" after the election.

Hamley’s, the UK historic toy retailer, took their first step in an ambitious drive into India, with the opening of their first store in Mumbai. The company’s £22 million expansion into Asia’s third-biggest economy will see 20 outlets open across the country in seven years. A spokesman for Hamley’s announced that India was a key part of Hamley’s effort to expand into emerging markets, as they were attracted to the growing population and the potential of a previously restricted retail sector.

Kraft Foods has thrown its support behind a national chain of Cadbury-branded cafés that will offer afternoon teas and a wide range if chocolate products service in a move to compete with the high street coffee shop chains.

Cadbury had been in discussions about the outlets long before Kraft made its hostile bid last September and signed off the deal at the end of January – just before the US company took control of the confectioner.

The US food-maker, who took over Cadburys this year, has now endorsed a 20-year licence to a group of retail entrepreneurs to set up and manage the high street chain, to be called Cadbury Cocoa House.

The group could open as many as 60 cafés in locations around the UK in the next three to five years, and has already begun to negotiate with landlords for the first sites in London, which could be running before the end of 2010.

Following a £13 million ($20 million) management buyout the British arm of Reader’s Digest was pulled out of bankruptcy on Friday, The news means that Reader’s Digest Association Ltd. will now continue to be published under its well-known name.

The U.K. subsidiary of Reader’s Digest took shelter in administration, a form of bankruptcy protection, on Feb. 17 because it had been unable to gain agreement on a plan to close a pension deficit. That decision paved the way for the U.S. parent company to emerge from Chapter 11 reorganization.

Analysts have confirmed that since the start of 2007, the pound has dropped about 25 percent on a trade-weighted basis, making exporters’ goods less expensive overseas. Bank of England policy makers are counting on sterling’s weakness to aid the recovery and reduce domestic spending at a time when the nation faces a record budget deficit.

The pound continues to retain its level above $1.50, closing at $1.5372, while falling back in value ever so slightly against the Euro at 1,1403.

U.K. stocks rose again before the close on Friday, making for the benchmark FTSE 100 Index’s sixth straight weekly gain, the longest stretch of such gains since 2005. The gains were on increased confidence, as the European Union agreed to a contingency rescue package to help Greece cut its budget deficit.

The FTSE 100 advanced 58.28, to 5,770.98, extending this week’s gain to 0.5 percent.

US stock prices dramatically reversed Thursday’s negative start

At the closing bell, the Dow Jones Industrial Average was up 70 points at 10,927.07 while the NASDAQ Composite was 18 points higher at 2,454.05.

Greek bonds have plunged this week on renewed concern that the country won’t succeed in cutting its budget deficit, the European Union’s largest. Leaders of the nations who share the euro last month endorsed a Franco-German proposal to help Greece with a mix of International Monetary Fund and bilateral loans at market interest rates that would be triggered only if Greece runs out of fund-raising options.

China on Saturday announced a rare deficit in its politically sensitive trade balance for March, the first in six years, bolstering Beijing’s argument that the value of its currency only has a limited impact on international trade flows.

News of the $7.2 billion deficit comes at a fortuitous time for Beijing, which is under pressure particularly from the US to allow the renminbi or the Chinese yuan to appreciate.

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Tags: Alistair Darling, Bank, Bank of England, Banking, British Economy, Cadbury, Credit Crunch, Currency, Dow Jones, EasyJet, Economics, Economy, Financial News, FTSE, Halifax building society, Hamley's, Interest Rates, International Monetary Fund, Kraft Foods, Marks & Spencer, Money, NASDAQ, petrol prices, Reader's Digest, Recession, Ryanair, Sir Stuart Rose, Society of Motor Manufacturers and Traders, Stock Markets, UK Banks, UK Economy, UK government, UK Mail, UK Recession