Sainsbury's boss says interest rates need to be cut to stimulate UK consumer spending
Boss Sainsbury's Britain said it needed several interest rate cuts to stimulate spending, especially on non-essential items.
Sainsbury's chief executive Simon Roberts said:
Customers continue to remain cautious, especially in the area of discretionary spending.
He said consumer caution
It’s not surprising, given all that families have been through during the cost of living crisis.
Until successive interest rate cuts are implemented, preferably as soon as possible, consumers will likely remain cautious about discretionary products.
Roberts said better weather would encourage people to spend money on things other than food: Sainsbury's sold more fans and air conditioners than it had so far this year when the UK was hit by a “mini heatwave” last week.
This shows that as the weather changes, customers want to buy the things they need to enjoy the summer.
Sainsbury's said that while consumers continue to buy more food in stores than a year ago, growth in grocery sales slowed to 4.8 percent in the latest quarter from 7.3 percent in the previous quarter as inflation across the market eased.
the Argos The company's television chain saw revenue fall 6.2% despite a 25% increase in TV unit sales from a year ago as sports fans prepared to watch the men's Euro 2024 soccer matches.
The company said the decline reflected an “unseasonable start to summer” with cold, wet weather hitting sales of summer items such as paddling pools and garden furniture which had thrived at the hot start to last summer.
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Sainsbury's said sales growth had slowed in recent weeks as food price increases eased and bad weather and higher living costs led consumers to shop “more cautiously”.
Same-store sales rose 3 percent in the three months to June 22, excluding the impact of fuel costs and the closure of the group's Argos stores in Ireland. This compares with a 4.8 percent increase in the previous quarter.
Sainsbury's chief executive Simon Roberts said consumer caution was the cause of the problem.
It's not surprising given all that households have been through during the cost of living crisis: consumers will likely continue to be cautious on more discretionary items until successive interest rate cuts are implemented, preferably as soon as possible.
People want more certainty that the cost of homeownership will come down.
Despite lingering pressure on households from rising services sector prices, inflation across the euro zone slowed to 2.5 percent in June, and the European Central Bank is expected to keep interest rates on hold this month.
Annual consumer price inflation across the EU20 fell from 2.6 percent in May, according to a preliminary estimate from Eurostat, the European Union's statistics office, and was in line with financial market expectations.
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Q: What is the biggest risk facing the economy right now?
Both Powell and Lagarde pointed to cyberattacks.
Lagarde also spoke of a “backlash against the fight against climate change.”
The discussion then turned to artificial intelligence, with Lagarde saying the ECB uses AI in its models and “whenever large-scale language mining is required on structured and unstructured data.”
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U.S. electric vehicle makers said price cuts and incentives had helped stimulate demand.
Shares in the world's most valuable automaker rose more than 8 percent, valuing the company at $712 billion.
The EV maker delivered 443,956 vehicles in the three months ended June 30, down 4.8% from the same period last year and up 14.8% from the previous quarter.
Asked about U.S. debt levels, Powell said the U.S. “has very large deficits at a time of strong employment.”
The debt levels are not unsustainable, but the path we are on is unsustainable. This is something we need to seriously address going forward… We cannot run deficits like this in good economic times.
Asked about the French elections, Lagarde declined to comment directly.
Our mandate is price stability, which is obviously based on financial stability.
He said the central bank was monitoring market developments, such as bond yields, as usual.
We are very attentive.
Powell reiterated that risks to inflation are much more balanced than they were a year ago, when the Fed was primarily focused on trying to bring down high levels of inflation. Asked about cutting interest rates, he said:
The risk with inflation is that we act too soon and inflation comes back, and the other risk is that we wait too long.
And that would erode economic momentum, including labor market expansion, he said.
Powell was next asked about the inflationary effect of Taylor Swift's European tour and service inflation, and he dodged the first part, replying:
It is well known that services inflation is stickier and tied to labor.
We see the labor market cooling, and it's cooling over time, just as you would hope.
Inflation will not return to 2% this year or next, but probably in the second half of next year.
Inflation in the US is currently at 2.6%.
“Why are prices becoming sticky?” Lagarde was asked in reference to euro zone services inflation at 4.1%.
The road ahead is likely to remain difficult until the end of 2024.
He said the ECB was trying to establish the “root causes” – whether the rise in services inflation was due to a permanent change or the lagged effects of other factors.
There are big wages behind it, and the service sector accounts for a large proportion of the workforce.
“We are back on the path of deflation,” he said. Jerome Powell.
He added that he wanted to “have more confidence” before deciding to scale back the policy.
The U.S. economy is doing well and the labor market is strong, so there is some room to respond over time.
Acting too soon risks undoing the good work we have done so far to curb inflation.
Right now we have risks on both sides.
In her opening remarks, Ms. Lagarde said:
We are well down this deflationary road.
Asked whether the market was expecting a pause in interest rate cuts, the governor replied:
I’m not setting anything up for anyone…I’m looking into the inner workings of the economy.
European Central Bank President in Sintra, Portugal Christine Lagarde Chairman of the Federal Reserve Jerome Powell I am currently speaking on a policy panel at the ECB's Central Bank Forum in Sintra, Portugal. The panel included: Roberto de Oliveira Campos NetoGovernor of the Central Bank of Brazil. You can watch it live here (via the ECB website).
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Lagarde said yesterday that favorable economic conditions suggested a strong labor market and stable wage growth meant there was no urgency to cut interest rates further.
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The platform will compete with services such as Netflix, Disney+, ITVX, Channel 4's streaming platform and BBC iPlayer.
Fox said the service will launch with more than 20,000 movies and TV shows on demand, including its own originals as well as content from Disney, Lionsgate, NBCUniversal and Sony Pictures Entertainment.
Twilight movies, starring roles Robert Pattinson and Kristen StewartCurrent offerings include the horror movie “Candyman” and Tubi's original reality show “House of Heat.”
Book festival formerly sponsored by Baillie Gifford seeks donations
9 festivals that investment companies have sponsored in the past Baillie Gifford We are currently accepting donations.
“Amid intense debate over arts funding and challenges to our continued prosperity,” the joint statement read, the festivals are “joining forces” and “calling for increased support.”
Monday's statement comes just weeks after Baillie Gifford ended its partnerships with nine festivals, including the Hay Festival, Edinburgh International Book Festival and Cheltenham Literature Festival, after campaign group Fossil Free Books (FFB) called on the company to divest from fossil fuel and Israel-linked companies.
“As authors and other publishing professionals, we care deeply about literary festivals and support their calls for sustainable funding,” the FFB said in a statement responding to the publication.
