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Markets today: Record rise in inflation, Apple's new gadgets, lockdown dampens Fevertree UK sales

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Markets today: Record rise in inflation, Apple's new gadgets, lockdown dampens Fevertree UK sales
  • UK inflation is nearing decade highs. But are the price increases transitory or something to worry about?
  • Apple has launched four new iPhones, as a string of negative stories weigh on the company
  • The UK lockdown hit demand for drinks mixers, impacting sales growth for Fevertree

Inflation nation

Hardly a great surprise, but UK inflation is soaring.

The latest figures from the Office for National Statistics showed Consumer Price Index inflation leapt to 3.2 per cent in August on an annualised basis, representing a 1.2 per cent increase from the figure recorded in July – the most significant monthly change on record. Inflation is now at its highest level since 2012. 

The main drivers were transport, restaurant and hotel prices, as consumers ramped up spending following the full removal of Covid restrictions in England in July. Investors will be wary that coupled with slowing economic growth, rising inflation could lead to a dreaded period of so-called stagflation. But commentators and economists are still predicting that the surge in consumer prices, which many anticipate will rise above 4 per cent before the year end, will be transitory. Soaring energy prices are already expected to add 0.7 per cent to inflation at the next calculation, according to Paul Dales of Capital Economics. 

 

Elsewhere in the world, US consumer price inflation actually eased slightly in August, falling 0.1 per cent to 5.3 per cent. The spread of the Delta variant also appears to be harming growth in China, where retail sales in August rose 2.5 per cent, down from 8.5 per cent in July. GD

Read more: 

How to adjust your portfolio diversification for inflation

Consumer giants are gearing up to pass inflation on to consumers

Investors face a rates conundrum

Apple’s bells and whistles

What do you do if your company is suffering from the departure of a top executive, allegations of workplace harassment, and scrutiny from a highly publicised antitrust lawsuit?

If you are Apple (US:AAPL), you get the public on your side by launching some flashy new tech.

At a virtual event yesterday, the world’s most valuable company unveiled plans to release four 5G-enabled iPhones, as well as new iterations of its iPad and Watch devices. 

The announcement was enough to temporarily divert attention from the negative press that has weighed on Apple in recent weeks, after it emerged that the executive responsible for its secretive car project had jumped ship to Ford (US:F), and that the US labour watchdog is investigating claims against the company. Earlier this week, a judge also ruled that the tech giant could no longer force developers to accept in-app purchases through its App Store – a decision that should impact the company’s income from commissions long after the hype about its new gadgets dies down. OT

Read more:

Sell Apple before the worm turns

Fevertree fizzes out

Fevertree (FEVR), the popular producer of drinks mixers, reported a sharp slow down in sales growth in its core UK market during the six months to June, as it suffered from the country's strict lockdown in the early months of the year.

Nonetheless, the pandemic has skewed demand for Fevertree's products, so investors should look ahead from these results. Going forward, much will hinge on the company's performance after a recent boost from restocking sales fades, as well as the success of its expansion into the US - indeed sales outside the UK continue to grow strongly. A reported dip in margins may have come as little surprise given the extra expense of operating in Covid times, as well as the worker shortages in the logistics industry, but shareholders should keep a close eye on this too. GD

Read Mark Robinson’s take on the results here.