Shop Prices Fall… Slightly

On the back of a string of recent upsets, there was at last some good news for the UK today. The BRC shop price monitor for the last month showed that prices cooled to 8.4% from the prior month’s 9%. While obviously, still at elevated levels, the data is at least moving in the right direction. The prior month’s 9% reading was the highest level recorded since the BRC began compiling the data in 2005. As such, investors are hoping this marks a peak.

Food Prices Still High

Looking at the breakdown of the data, food prices were seen rising 14.6%, marking a second month of slowing price growth. However, the figure still represents a high burden for UK households. Looking ahead, BRC chief executive Helen Dickinson shared her view that if the current trajectory continues, food price inflation should be back in single digits by the end of the year.

Hawkish BOE Expectations

Despite this outlook, hawkish BOE expectations remain in place. Along with hiking rates by a larger .5% this month, the BOE signalled that more tightening is likely needed. The market is currently looking for at least two more .25% hikes this year dependent on inflation, with the risk very much alive that the BOE pushed ahead with a further .5% hike in August. As such, incoming UK data will be closely watched, particularly inflation readings.

Technical Views

FTSE

The failure at the 7678.8 level has seen the FTSE turning sharply lower. Price is now sitting just atop the next key support level at 7337.6. This is a main pivot for the market which bulls need to defend or risk seeing price drop down to the deeper support area at 7076.9, where the bear channel lows sit also.