Aldi and Lidl enjoy record Christmas sales; Red Sea tensions lift oil price – business live | Business

The UK manufacturing sector declined for a seventeenth successive month in December, capping a dismal year marked by job cuts and falls in new orders and output.

The latest flash estimate fromm the S&P Global/CIPS purchasing managers’ index (PMI) fell back to 46.2 in December – a score of 50 represents the neutral mark – having hit a six-month high in November.

The flash report also found that business optimism fell to a 12-month low in December “reflecting a faltering economy, client closures and high interest rates”

Caroline Litchfield, partner and head of manufacturing and supply chain sector at Brabners, said:

“December was reflective of a dismal year for the sector. Nevertheless, many manufacturers are optimistic for the year ahead as fresh stimuli – including the Government’s £4.5 billion advanced manufacturing pot and regional Investment Zones – create more fertile grounds for investment.”

The rate of food price inflation fell to an 18-month low in December, but retail bosses have warned that there is a risk that the rate could rise again this year.

Grocery price inflation fell from 7.7% in November to 6.7% last month, the lowest level since June 2022, helped by falls in the price of wine, port and sherry before Christmas.

Fresh food inflation also fell to 5.4% in December, compared to 6.7% the previous month, according to new figures from the British Retail Consortium (BRC).

However, overall shop price inflation remained static at 4.3% because non-food products had a “challenging December” with price inflation rising to 3.1% from 2.5% in November.

Helen Dickinson, chief executive of the BRC, warned that shop prices are at risk of accelerating again this year.

“Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead. New border checks for EU imports, hundreds of millions more on business rates bills from April. Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.”

My colleague Sarah Butler has the full story here.

Chase UK, the digital bank launched by US giant JP Morgan two years ago, could reach profitability as soon as next year as savers hunt around for the most competitive deals in the market.

Canary Wharf-based Chase UK, which launched in 2021 with the goal of challenging the UK banking sector still dominated by a handful of high street lenders, said that it has attracted more than two million customers and manages around £15bn in deposits.

“We’ve been building the bank rapidly, so we believe that we can bring the UK business to profitability in 2025,” said Shaun Port, managing director of Chase UK, speaking to the Press Association. “We want to be a major player in the UK banking scene, and to do that, we obviously need to make banking with Chase compelling.”

In November, Daniel Pinto, president of JP Morgan, said that he expected the UK bank to break even in the next 12 to 18 months – at least two years earlier than previously expected.

JP Morgan had warned that losses from the UK digital bank would be about $450m (£352m) in 2022, and had estimated estimated a similar amount for last year.

Port said that Chase UK is “efficient” and “careful on costs” as it moves the loss-making business toward profitability.

He added that there is a “clear desire to be more resilient” among customers, with people more actively managing their finances, including by transferring their monthly salary into accounts with higher interest and then moving money out to cover major bills.

“The banking sector is in good health, but people can do more to earn more from their money, rather than just leave it with their existing provider and getting very little on their savings,” he said.

Chase UK is set to offer credit cards this year as it looks to further expand its consumer products.

Chase is also reportedly looking to launch in Germany and other European Union countries this year.

The price of oil has surged by almost 2% in the first trading session of the New Year, after Iran sent a warship into the Red Sea.

The price of Brent Crude rose to almost $79 a barrel in early trading as tensions continue to rise in one of the world’s most vital shipping routes.

Iran sent a warship to the Red Sea following the US Navy’s sinking of three Houthi boats, killing 10 militants, to repel an attack on a Maersk container vessel over the weekend.

Attacks on boats transiting the route by Houthi rebels out of Yemen has forced shipping companies to use the alternative and much longer route around the southern tip of Africa instead of risking using the Suez canal to enter the Mediterranean Sea.

Kyle Rodda, senior financial market analyst at Capital.com, says:

“The prospect of escalating conflict in the region threatens energy supply stability through the important shipping channel, not to mention global economic activity, if it sparks broader hostilities through the Middle East.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Aldi and Lidl enjoyed record Christmas sales as shoppers turned to discount chains to stretch household budgets over the festive season amidst the cost of living crisis.

Aldi said that sales topped £1.5bn for the first time in the four weeks to Christmas Eve, with sales up 8% year-on-year, and has pledged to cut prices to keep up the pressure on rivals.

Meanwhile, Lidl said that its deluxe product range underpinned a 12% year-on-year sales increase in December, as shoppers sought a “touch of luxury at lower prices”.

Both chains said that Friday 22nd December, the last weekday before Christmas, proved to be a record trading day with Aldi, the UK’s fourth biggest chain, saying 2.5m customers used its stores for their full festive shop.

Last week, consumer card spending figures from Barclays showed that discount supermarket chains accounted for an all-time high 15.5% grocery spending last year, up a percentage point on 2022, as consumers looked for ways to reduce the cost of their weekly shop.

“The German discounters which are best known for their rock bottom prices have enjoyed a stellar Christmas amid the cost-of-living crisis as price sensitive consumers trade down to Aldi and Lidl’s attractively priced offering,” said Victoria Scholar, head oof investment at Interactive Investor. “The two supermarkets have intensified price competition in the UK, prompting other supermarkets to offer discounts and promotions and think of innovative ways to drive customer demand such as a renewed focus on their loyalty schemes.”

The agenda

• 9am GMT: Eurozone manufacturing report for December

• 9.30am GMT: UK manufacturing PMI report for December

• 2.45pm GMT: US manufacturing PMI report for December