Proactive Investors - Shop price inflation hits lowest level since May 2022.
More on the shop price inflation figures in the UK which fell in January to its lowest rate since May 2022 as retailers offered heavy discounts to entice customers.
According to the British Retail Consortium-NielsenIQ Shop Price Index, January's shop prices eased to 2.9% higher than a year ago, down from 4.3% in December and below the three-month average of 3.9%.
Inflation on non-food products fell to 1.3% in January, down from 3.1% in December – the lowest rate since February 2022.
Food inflation also slowed, to 6.1% in January from December's 6.7%, the ninth consecutive fall and the lowest rate since June 2022.
The BRC said the easing is "good news for the morning brew" as the price of tea and milk fell, while alcohol remained more expensive on the back of increased duties.
BRC chief executive Helen Dickinson said: "Some new year cheer as January shop price inflation slid to its lowest level since May 2022.”
She noted non-food goods drove the fall”, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.”
But Mike Watkins, head of retailer & business insight at NielsenIQ, cautioned “consumer demand remains fragile as most households are yet to feel better off after nearly two years of inflation."
Pets at Home warns, WPP trading in line
Elsewhere, Pets at Home Group PLC (LON:PETSP) has warned its revenue growth in the third quarter “fell below its own expectations” as discretionary sales dropped.
As a result, it lowered full-year profit guidance to around £132 million, lower than the £136 million suggested three months ago.
The company saw volume growth and share gains across food, against a slowing market backdrop, but said discretionary accessories trends remained soft.
WPP PLC (LON:WPP) has updated investors on trading ahead of today’s Capital Markets Day.
The advertising group expects to report full-year results in line with guidance with 2023 like-for-like revenue less pass-through costs expected to be 0.9%, at the top-end of the 0.5-1.0% range.
Headline operating profit margin is expected to be 14.8%, equivalent to 15.0% on a constant currency basis, which is at the top end of guidance of 14.8-15.0%.
Looking ahead, it predicts 2024 LFL revenue less pass-through costs growth of 0-1% and 2024 headline operating profit margin improvement of 20-40bps (excluding the impact of FX).
Diageo sales and profit hit by weak Latin America & Caribbean showing
Diageo (LON:DGE) has reported its half-year numbers, posting a drop in half-year revenue and operating profit reflecting a 23% decline in Latin America & Caribbean (LAC) sales.
The owner Guinness, Johnnie Walker and Smirnoff said sales in the half-year ended December fell 1.4% to $11.0 billion, with organic sales down 0.6%, driven by a 23% decline in LAC.
Reported operating profit in the half-year declined 11.1% to $3.3 billion, and reported operating profit margin contracted 329 bps due to lower organic operating margin and a negative impact from exceptional operating items.
Chief Executive Debra Crew said: “The first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment.”
She said the “materially weaker” performance in LAC, was driven by fast-changing consumer sentiment and high inventory levels.
“We have taken action and have further plans to reduce inventory to more appropriate levels for the current consumer environment in the region by the end of fiscal 24,” she added.
However, the firm expects macroeconomic pressures will persist in LAC and impact progress in reducing inventory levels.
As a result, organic net sales in LAC are forecast to decline between the range of 10% to 20% in the second half of the financial year, compared to the second half of financial 2023.
The organic net sales growth rate for the group in the second half is expected to gradually improve compared to the growth rate in the first half.
Diageo expects a gradual improvement in North America in the second half despite uncertainty in the consumer environment.
The interim dividend was boosted by 5% to 40.50 cents per share.