Livin’ On A Prayer                                                                             17 May 2024

Mainly attributable to marked growth in affordable and mid-market communities, Q1 property prices in Dubai rose for the fifteenth consecutive quarter. Cushman & Wakefield Core noted that “there are no signs of capital values slowing down yet”, and “city-wide sales prices are up by 20% year-on-year and 66% higher than Q1 2020 (pre-Covid19).” The consultancy also noted that apartment prices, particularly in the prime sub-markets including Palm Jumeirah, City Walk, Downtown Dubai and Dubai Marina, are still increasing but at a more subdued level than earlier annual 20% plus growth. It also stated that “affordable and mid-market apartment communities, owing to a lower base, have seen a sharper increase of 30% and above in Discovery Gardens (37%), Dubai Sports City (34%) and Dubailand (32%).” Further data showed that the majority of villa districts experienced an annual increase in sale prices of above 20%, with units in Jumeirah Village Circle, The Lakes and Jumeirah Park seeing the highest increments.

A new branded residential project, incorporating Italian brand Tonino Lamborghini Group’s designs, (including materials, interior design, fittings, and kitchens from his design studios), has been launched in Dubai by Gulf Land Property Developers. Located in Meydan, the four-tower project, encompassing some 750k sq ft, will incorporate five hundred and forty-one units, ranging from studio to 4 B/R apartments. Two of the buildings will have six floors and the other two, twelve – and all four will have two basement parking levels. It is estimated that Dubai, already among the top global cities for branded residences, numbering around fifty, will see a further seventy added to its portfolio in the coming years.

With some sectors reporting up to 30% rental increases, (in locations such as Jumeirah Lake Towers, Business Bay, Dubai Marina, One Central, and DIFC), there has been an average 14% rate increase for Grade A offices. Savills noted that the emirate’s office market sector has been boosted by a resilient regional economic rebound and strong demand from overseas investors and businesses. The international real estate advisor also added that other factors such as the government’s business-friendly initiatives, including full foreign ownership, changes in residency visa rules, and support for tech firms through platforms like FinTech Hive, Dubai Technology Entrepreneur Campus, and C3 Social Impact Accelerator. Savills also noted a change in work models, with a marked increase in demand for flexible office spaces, including serviced and co-working spaces, reflecting changing work models. Not only has there been an increasing number of new businesses entering the Dubai market, that would prefer serviced office spaces as they bed down in a new location, but also there has been an upward trend in existing occupiers in Dubai transitioning to serviced office spaces to adopt more flexible work models and to save on capex.

Driven by route expansion and robust global travel demand, Emirates turned in a record profit, up 62.3% on the year, to US$ 4.70 billion, with revenue 13.0% higher at US$ 33.02 billion; despite EK carrying more passengers, up 19.0% to 51.9 million, (with seat capacity increasing 21%), it was negatively impacted by currency fluctuations – mainly in Egypt India and Pakistan – to the tune of US$ 545 million. The Emirates Group also announced a US$ 1.09 billion dividend for its owner, the Investment Corporation of Dubai, with staff the beneficiaries of a massive twenty-week bonus. During 2023, it added capacity to twenty-nine destinations and also signed new codeshare and interline agreements, with eleven airlines, further extending its network’s reach. By its fiscal year end, 31 March, EK’s network spanned one hundred and fifty-one destinations, including ten cities served by its freighter fleet only. Notwithstanding passenger yield dipping 2.0%, to US$ 0.10 per revenue passenger kilometre, due to a change in cabin and route mix, fares and currency, it closed year end with a record US$ 11.69 billion of cash assets. During the year, it paid off all its regular aircraft-related payment obligations and repaid an additional US$ 600 million from the US$ 4.77 billion borrowed during the Covid-19 pandemic.

Both revenue and net profit returned record returns for the Emirates Group, (which includes global airport services company Dnata), posting a 15% rise to US$ 37.41 billion and a massive 71% profit surge to US$ 5.10 billion. It ended the year with its highest ever cash balance of US$ 12.83 billion. Driven by robust growth across its business divisions, Dnata’s profit quadrupled to US$ 381 million, while its revenue rose by 29.0% to a record US$ 5.23 billion.

Following an agreement with DP World, Sweden’s Einride is to be the catalyst to assist with the electrification of inter-terminal container flows at Jebel Ali Port. With the electric freight mobility company’s collaboration, it will assist with the electrification of inter-terminal container flows at Jebel Ali Port, which, in turn, will improve efficiency and sustainability. DP World’s chief executive, Abdulla bin Damithan, commented that “our partnership will drive greater operational efficiencies, further decarbonise terminal operations and pioneer greener practices for the logistics sector.” Founded in 2016, Einride makes driverless electric freight lorries, charging ports and sustainable freight technology to improve efficiency of transporting goods. By the end of the year, it is hoped that this partnership will be scaled up to support 1.6k container movements daily, with the assistance of one hundred connected electric lorries.

This week, DP World opened three major Romanian sites – two in Constanta, and the other in Aiud – which will enhance the country’s growing status as a key hub for European trade The global port operator has invested US$ 71 million in a five-hectares ‘project’ terminal for heavy, large and complex cargo, and a new ‘roll-on, roll-off’ (RO-RO) terminal that will handle up to 80k vehicles per year at its peak; a further US$ 50 million will see a new multi-transport platform in Constanta that will open next year A further US$ 23 million will be spent in Aiud to build a new eight-hectares ‘intermodal’ logistics hub, connecting rail and road. The latest investments will improve the connectivity between DP World’s existing sea, rail, barge and truck services across Romania and will enhance the movement of goods between mainland Europe through to the Black, North and Adriatic Seas.  It will increase the cargo flows by around two million tonnes per annum through the country. DP World also plans to open a centre of excellence for services in the Balkans, to facilitate trade for the countries around Romania.

In its latest report, the FTTH Council confirmed that, for the eighth consecutive year, the UAE has once again been recognised as the global leader in Fibre to the Home penetration, with a 99.3% rate. The survey encompasses twenty countries, that have exceeded 50% FTTH availability, and compared global statistics on fibre optic network penetration. It placed the UAE above Singapore (97.1%), Hong Kong (95.3%), China (92.9%), and South Korea (91.5%).

The definition of a greenfield investment is when a parent company creates a subsidiary in a different country, building its operations from the ground up. The latest Financial Times fDi Markets report places Dubai the world’s top destination for greenfield foreign direct investment projects for the third consecutive year. Last year, it managed to secure 1.07k FDI projects, well ahead of Singapore and London, with totals of 442 and 431 respectively. Over the past five years, the emirate’s share on the global stage has more than tripled from 2019’s 1.7% to 6.0%, which is in line with the emirate’s strategy to become a top global city under its D33 economic agenda. It also secured the top global ranking for headquarter FDI projects, for the second consecutive year, attracting sixty projects, followed by Singapore (forty) and London (thirty-one). Nearly 44.8k estimated jobs, up 15.5%, were created through FDI in Dubai, as the emirate attracted nearly US$ 10.71 billion in total FDI capital last year. Crown Prince, Sheikh Hamdan bin Mohammed noted that “in 2024, as we work to accelerate the D33 Agenda, we will continue to intensify our initiatives to nurture a competitive economic ecosystem that fosters value creation. We are committed to making Dubai a place where the world’s leading companies, entrepreneurs and innovators come to build the future.” It is forecast that by 2033, under its D33 strategy, Dubai’s economy would have doubled to US$ 8.71 billion and that it would be counted as one of the world’s top three cities. GlobalData posted that the UAE attracted US$ 23 billion of FDI in 1,277 projects spanning business and professional services, software and IT services and financial services inter alia.

At a meeting in Abu Dhabi, Zhang Yiming, China’s ambassador to the UAE, announced economic ties between the two countries were strengthening, as indicated by Chinese investments in the UAE rising by more than 16% annually in 2023 to $1.3 billion; this amount accounted for 60% of China’s total investment in Arab countries. On the flip side, UAE investments in China rose by 120% on the year and accounted for “90% of Arab countries’ investments in China”. The ambassador continued by adding that the Emirates “remains China’s second-largest trading partner, the largest export market and the third largest engineering market among Arab countries”.

The fourth edition of theE-commerce in the Middle East and North Africa 2023 report, published by EZDubai – in partnership with Euromonitor – indicated that, last year, the total size of the UAE e-commerce market reached US$ 7.49 billion, with expectations that it could grow 77.5% to US$ 13.30 billion by 2028. This improvement and positive forecast are down to many factors such as a tech-savvy youth demographic, strong government support in terms of legislation/regulations, and substantial investments in digital infrastructure. In 2023, the leading sectors by value were clothing and footwear, consumer electronics, and media products. The survey concluded that smartphones are highly popular as a means for online shopping, and that credit and debit cards are the most common payment methods for online purchases, favoured by 93.2% of respondents. The sector in MENA grew 11.8% in 2023 to US$ 29.02 billion, with a 72.40% expansion forecast by 2028. Mobile commerce in the country has more than quadrupled in the five years to 2023 to US$ 3.90 billion.

Tecom Group is to invest US$ 463 million in an acquisition and development plan that will see it support further growth as it will invest US$ 278 million in acquiring commercial and industrial assets from Dubai Holding Asset Management (DHAM) and has earmarked US$ 184 million to develop grade A offices in Dubai Design District (d3). Combined they have a gross leasable area of 334k sq ft and have high occupancy levels with “a loyal and quality customer base” that includes regional and international tech companies. It will also spend US$ 112 million to acquire 13.9 million sq ft of land for industrial use in Dubai Industrial City from DHAM.

The market cap of Arab stock exchanges exceeded US$ 4.361 trillion at the end of April 2024. According to the Arab Monetary Fund (AMF), the top six local exchanges were Saudi Stock Exchange, (US$ 2.87 trillion), Abu Dhabi Securities Exchange, (US$ 754.7 billion), Dubai Financial Market, (US$ 193.4 billion), Qatar Stock Exchange, (US$ 155.4 billion), Kuwait Stock Exchange, (US$ 135.6 billion), Casablanca Stock Exchange, (US$ 68.9 billion), Muscat Stock Exchange, (US$ 63.2 billion), and Egyptian Stock Exchange, (US$ 34.9 billion). The remaining six exchanges – Amman, Bahrain, Beirut, Tunis, Damascus and Palestine – had market values of US$ 23.4 billion, US$ 21.2 billion, US$ 17.2 billion, US$ 8.1 billion, US$ 5.9 billion and US$ 4.3 billion respectively.

In January 2017, excise tax was introduced to the UAE economy and a year later, the country saw the appearance of VAT. This week, Younis Haji Al Khouri, Under-Secretary of the Ministry of Finance announced from their initiation dates through to 31 December 2023, total revenues were at US$ 47.30 billion. He added that VAT revenues at the state level reached US$ 43.48 billion, while the federal government collected approximately US$ 13.04 billion over the same timeframe. In the Excise Tax sector, collections at the state level totalled US$ 3.83 billion, with the federal government having collected approximately US$ 1.42 billion. He also noted that this year, the estimated total expenditures of the federal general budget are US$ 17.44 billion, with expected revenues of US$ 17.90 billion; this results in an expected surplus of US$ 0.463 billion.

The recently DFM-listed Spinneys posted positive Q1 financial results, with revenue up 10.9% to US$ 222 million, (driven by an increase in retail revenue, with transactions 9.5% higher on the year), and gross profit posting a 15.0% gain to US$ 92 million, as gross margins rose 1.5% to 41.2%; this was down to its successful private label strategy, as well as its efficient sourcing and supply chain capabilities. Profit for the period increased, on the year, 12.8% to US$ 20 million, with net profit margin 0.20% higher at 9.2%. Adjusted EBITDA1 came in 8.7% higher, at US$ 41 million, whilst an Adjusted EBITDA margin2 of 18.5%, impacted by the one-off IPO-related costs of US$ 3 million and pre-store opening expenses in Saudi Arabia.

Last Friday, Drake & Scull International closed its subscription for new capital, with proceeds exceeding US$ 123 million. The subscription process, for the period of 25 April to 10 May, at a discounted rate of US$ 0.068 per share, exceeded one and a half times the minimum required to complete the restructuring process; the new capital of 2,887 million shares is valued at US$ 787 million. Its shares will resume trading on the DFM next Monday, 20 May, after completing the procedures required by the regulatory and supervisory authorities.

Two factors have had a negative impact not only for Ansari Financial Services but also for other firms in the same sector; they were the uncertainty of the prevailing macroeconomic conditions and pressure from the parallel market, within major remittance corridors. Q1 saw a 4.3% decline in operating income, and a 26.0% fall in net profit after tax to US$ 27 million, (attributable to the introduction of 9% Corporation Tax and increased capex in expanding the branch network). On the year, total transactions increased by 5.1%. There was a 24% increase in Wage Protection System (WPS) volumes, with digital channels reporting an increase of 25%, accounting for 21% of the overall outward remittances. By the end of March, Al Ansari had two hundred and fifty-nine outlets.  Al Ansari Exchange in Kuwait integration with Oman Exchange will be consolidated in Q3, with Al Ansari Digital Wallet set to be launched before the end of year.

In Q1, Emaar Properties posted its highest ever quarterly group property sales, 47% higher at US$ 3.68 billion, compared to Q1 2023, with revenues of US$ 1.83 billion and net profit before tax at US$ 1.17 billion – 16% higher on the year. Emaar’s revenue backlog from property sales, growing at 9%, reached US$ 21.34 billion as of March 2024. Driven by incremental property sales, the developer’s backlog from property sales was US$ 19.3 billion, which represents future revenue from property sales to be recognised over the next four to five years.

Emaar Development PJSC, majority-owned by Emaar Properties, announced a 50.0% annual increase in property sales in Q1 2024, reaching US$ 3.51 billion, and a 48.0% annual hike in EBITDA of US$ 463 million. Emaar now has a sales backlog of US$ 17.90 billion, which will be recognised as revenue in the coming years due to the sector’s robust performance. The country’s largest build-to-sell property development company successfully launched ten projects across various master plans during the quarter, and also made a significant acquisition of a land plot measuring sixty million sq ft near The Oasis masterplan, with a development value of US$ 11.17 billion. In Q4, it had acquired eighty-one million sq ft of land in the same location and used the plots to announce two major developments – The Heights Country Club & Wellness and Grand Polo Club & Resort – spanning over a total one hundred and forty-one million sq ft, with a total development value of US$ 26.16 billion.

DFM-listed Deyaar Development posted a 37.4% increase in Q1 net profit before corporate tax, to US$21 million, on the back of a 4.9% revenue jump to US$ 85 million. Total assets increased 7.4% to US$ 1,826 million as of 31 March 2024. Liquidity increased by US$ 124 million due to robust receivables and increased advances from customers, whilst earnings per share increased by 29.4% to US$ 0.0045. In March, the developer, majority-owned by Dubai Islamic Bank, announced its first ever dividend of US$ 0.0109, equating to 4% of its share capital of US$ 47.68 million.

Dubai Investments announced a 61.9% dip, on the year, in Q1 net profit attributable to shareholders after tax, to US$ 33; excluding the one-off gain on the fair valuation of investment properties last year, the group’s profit for the same period in 2024 has surged by 90%. Total income over the period was US$ 216 million – 21.7% lower compared to the same period in 2023 – with total assets remaining stable at US$ 58.47 billion. The company commented that “the Danah Bay project on Al Marjan Island in Ras Al Khaimah continues to witness robust demand, with steady construction progress”. It also recently launched its Violet Tower project in Jumeirah Village Circle, comprising studio, 1 B/R and 2 B/R apartments; prices start at US$ 158k, with completion slated for Q2 2026.

Salik Company PJSC posted an 8.1% hike in Q1 revenue to US$ 153 million, attributable to an 8.1% jump in toll usage fees to US$ 134 million, revenue from fines, 6.4% higher at US$ 16 million, (from 683k violations), and tag activation fees coming in 13.6% higher at US$ 3 million. In Q1, Dubai’s exclusive toll gate operator, saw 122.8 million cars pass through its eight gates. Net profit before taxes came in 10.9% higher to US$ 83 million during Q1. Mainly driven by the closure of the ongoing Floating Bridge, Al Maktoum Bridge gate posted a 49.0% Q1 increase in the number of revenue-generating trips, and Al Garhoud Bridge with numbers 9.1% higher. Excluding these two, the other six gates saw trip numbers up 5.3%, including Jebel Ali growing 12.0%. Two new toll gates will open in Q4 – Business Bay Crossing and Al Safa South. The company is also initiating new revenue streams, with the use of barrier-free paid parking system at Dubai Mall starting Q3. Ibrahim Sultan Al Haddad, CEO of Salik, said: “We continue to thrive in our core tolling business and remain focused on diversifying our portfolio through the expansion of ancillary revenue streams”.

The DFM opened the week on Monday 13 May, 30 points (0.7%) higher the previous week shed 105 points (2.5%) to close the trading week on 4,068 by Friday 17 May 2024. Emaar Properties, US$ 0.06 lower the previous three weeks, lost US$ 0.13, closing on US$ 2.06 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 4.56, US$ 1.54, and US$ 0.37 and closed on US$ 0.63, US$ 4.54, US$ 1.51 and US$ 0.36. On 17 May, trading was at two hundred and twenty-one million shares, with a value of US$ 111 million, compared to one hundred and sixty-nine million shares, with a value of US$ 83 million, on 10 May 2024.

By Friday, 17 May 2024, Brent, US$ 0.09 lower (0.1%) the previous week, gained US$ 3.08 (3.7%) to close on US$ 85.86. Gold, US$ 65 (2.8%) higher the previous week, gained US$ 46 (1.9%) to end the week’s trading at US$ 2,414 on 17 May 2024.

In the middle of a take-over battle, with BHP attempting to acquire it, (mainly for its copper operations), with a US$ 42.65 billion bid, Anglo American has announced plans to break up the business, announcing that it will sell or demerge major parts of the firm, including its De Beers diamond operation, Anglo American Platinum and its steelmaking coal businesses. This divestment would then leave the one hundred and seven-year-old UK mining giant focussing only on its copper, iron ore and crop nutrients businesses, with its chief executive, Duncan Wanblad, commenting that “we expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.” Anglo American also said it expected the reshaping of the firm would lower its costs by US$ 1.69 billion. It seems that BHP only wanted to buy Anglo American for its two copper mines in Chile and Peru.

Another week and yet another problem for Boeing management. In 2017 and 2018, two fatal aircraft crashes, both involving Boeing 737 Max aircraft, killed three hundred and forty-six people. Six years later, the US Department of Justice is considering whether to prosecute Boeing for breaching the terms of a 2021 agreement that shielded the firm from criminal charges linked to the incidents. The government body claimed that the plane maker failed to “design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.” Under the deal, Boeing paid a US$ 2.5 billion settlement, while prosecutors agreed to ask the court to drop a criminal charge after a period of three years. Relatives of the victims have called for criminal action against the company.

No need to feel sorry for Tesco’s chief executive who has been told that his basic pay will increase by only 3% this year which is lower than the raise given to his UK hourly-paid colleagues; it had recently raised pay for hourly earners by 9.1% to between US$ 15.14 to US$ 16.57. In the year ending 28 February, Ken Murphy was paid US$ 5.92 million in salary and bonuses, but this doubled to US$ 12.6 million following a bumper share award. The shares were awarded to him when he joined and paid out this year after he surpassed a number of performance targets. Pre-tax profits jumped 160.8% to hit US$ 2.90 billion, as sales rose by 4.4% to US$ 85.92 billion. To some observers, it seems incongruous that customers, having to pay higher prices, and staff, having to live on minimum wages, when the fat cats seem to be reaping all the benefits.

Latest data from the China Association of Automobile Manufacturers posted an annual 12.8% rise in automobile manufacturing to 2.406 million, as sales also headed higher, climbing by 9.3%, to reach 2.359 million units. New energy vehicle production surged 35.9% to 870k units, with sales up 33.5% to 850k units; they now account for 36.5% of all vehicles manufactured in April. Furthermore, the sales of Chinese-brand passenger vehicles, accounting for 63.5% of sales volume, posted an annual 8.4% rise to reach 1.272 million units.

In 2022, Mine One Partners, which it is claimed to be majority-owned by Chinese citizens, acquired land adjacent to Francis E. Warren Air Force Base in Wyoming, home to Minuteman III nuclear intercontinental ballistic missiles; subsequently, it installed cryptocurrency mining equipment. This week, citing spying concerns, a directive from President Joe Biden ordered that the company sells the land, within one hundred and twenty days. The White House commented that “the proximity of the foreign-owned Real Estate to a strategic missile base… and the presence of specialised and foreign-sourced equipment potentially capable of facilitating surveillance and espionage activities, presents a national security risk”. It is reported that the Committee on Foreign Investment in the US (CFIUS), a powerful body that scrutinises deals for national security threats, was not notified about the purchase by the company. When notified, it determined that the purchase had national security implications.

The US Department of Justice has charged the two Peraire-Bueno brothers with stealing US$ 25 million in cryptocurrency, in just twelve seconds, last year. Accusing the pair of wire fraud and money laundering, it noted that the alleged heist was the first time that such a “novel” form of fraud had ever been subject to criminal charges. Deputy Attorney General Lisa Monaco stated that they “stole US$ 25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme they plotted for months and executed in seconds.” Prosecutors allege the two used highly specialised skills that they learned at “one of the most prestigious universities in the world” to exploit Ethereum’s process for validating transactions. When confronted by a representative for Ethereum, the brothers declined to return the funds and took steps to launder and hide their stolen gains. If found guilty, the brothers, who studied mathematics and computer science at MIT, could face up to twenty years in prison.

This week, the People’s Bank of China (PBOC) said it would set up a US$ 41.5 billion facility to support affordable housing, at a time when the sector has been in crisis mode for the past three years. It has effectively scrapped the minimum mortgage rate and cut the minimum down payment for first-home buyers from 20% to 15% and from 30% to 25% for second homes. The money would be aimed to support local state-owned enterprises to buy unsold homes, as well as encouraging local governments to buy properties at “reasonable prices” and sell them as affordable housing.  It has also instigated several measures to help the embattled sector which include cutting the amount home buyers need for a deposit and encouraging local authorities to purchase unsold properties. In April, new home prices fell for a tenth month in a row by 0.6% on the month – the sharpest monthly decline since November 2014.

With only six months until the US presidential election, current incumbent, Joe Biden is seemingly getting tough on anything Chinese – this time ramping up tariffs on Chinese-made electric cars, (up to 100% from 25%), solar panels, (doubling to 50%), steel, (up from 7.5% to 25%) and other goods – to bank votes in what promises to be a divided and turbulent November for US politics. The measures include a 100% border tax, on electric cars from China, with the twin aims of protecting US jobs and responding to their unfair policies. The tariffs announced would hit an estimated US$ 18 billion worth of imports. There are many business owners that would prefer such tariffs being removed altogether, arguing that they were driving up prices for everyday Americans.

After several months of higher-than-expected inflation in the US, the pace of price increases indicated signs of slowing in April, down 0.1% to 3.4%, and this has bemused the Fed even further on whether it should adjust rates – either to twist, higher or lower, or ‘stick’. In the hope that it could tame inflation, the central bank, having had pushed rates to a heady 5.3% last July, had thought that the highest borrowing costs in two decades would help ease pressures pushing up prices. However, inflation is still someway off its 2.0% target and attempts to cool the economy have been thwarted by disappointingly high inflation data, leaving the Fed to decide its next step knowing that lower rates, in the present economic climate, could lead to a slowdown – and possibly major economic problems.

Still believing that interest rates will go lower this year, and following April labour market data, (that showed headline and core inflation declining 0.2% to 3.4%), the Dow Jones Industrial Average on Thursday broke through the 40,000-point level for the first time ever. This milestone is a sign that the US economy is in better shape than many had thought and is one of the best performing in the G20. Earlier in the week, the S&P 500 topped the 5,300 mark for the first time, whilst the Nasdaq Composite also reached an all-time high of 16,797.

Citing that it was in response to customer demand for cheaper prices, Morrisons has faced a customer backlash when it announced that it would be trialling the sale of New Zealand lamb, instead of 100% British lamb, in thirty-nine of its four hundred and ninety-eight stores. The supermarkets commented that “the blunt commercial reality is that New Zealand lamb is cheaper to source”, whilst adding that its butchers’ counters will also still sell British lamb. The National Farmers Union (NFU) said it was “disappointing” at a time the British livestock industry was under pressure and that New Zealand lamb is “produced to potentially lower standards”. NFU livestock board chair David Barton noted that the unprecedented wet weather” was an “enormous challenge” for British farmers, urging Morrisons to stick to its 100% British lamb commitment, whilst hoping the supermarket’s change was temporary and that the trial would soon come to an end. Morrisons announced in March that it had made a loss of more than US$ 1.25 billion last year, driven by soaring financing costs as the firm’s debt also grew. Many of its customers, struggling with overall higher costs, are changing their shopping habits and looking for cheaper products.

Consumer prices rose 3.4% in the year to April, down 0.1% on the month, driven by higher rents and petrol costs. A report on Wednesday indicated that spending was flat last month – a sign that the economy may be weakening – with multiple updates from big retailers warning that shoppers, especially those with lower incomes, are cutting back. Although there were price declines, in egg, milk, cheese and other dairy products, they were offset by rises in other sectors which pushed grocery prices 1.1% on the year. With rents 5.5% higher on the year, housing costs moved higher, as did car insurance and medical costs. Stripping out food and energy, prices rose 3.6% over the last twelve months – its slowest pace since 2021.

Although the Q1 UK jobless rate increased 0.1% to 4.3%, (outstripping inflation’s 3.2% rate), in the quarter ending 31 March, wage growth remained robust whilst the number of vacancies also slowed, indicating that more unemployed people were competing for the same jobs. The Office for National Statistics noted that pay, excluding bonuses, remained at 6.0%, that had been expected to slow to 5.9% over the period. Still higher than pre-pandemic levels, jobs on offer in the UK dipped 26k (2.8%) to 898k vacancies in the quarter ending 30 April. However, with unemployment also increasing, the number of unemployed people per vacancy has continued to rise. When taking inflation into account, wages grew by 2.4%. The wage figures will be closely watched by the BoE to decide if and when interest rates can be cut, but these latest wage growth figures, which came in higher than expected, may make it wary about cutting the 5.25% interest rate as early as next month.

A recent post-pandemic phenomenon, driven by historically high mortgage rates, has seen hundreds of thousands of homeowners, noticeably in the under-thirty age category take out new home loans that many of them will still be paying off into retirement. The number of such homeowners taking out such mortgages more than doubled over the two-year period, while for those aged under forty the number was up 30%. BoE figures show how the share of new mortgages, with a later end date, has increased, because many have no other option but to select an extended repayment period to control costs. Data shows that in Q4 2021, some 31% of new mortgages had an end date beyond state pension age, that two years later saw that rise to 42%. It must be noted that not only will many be paying off their mortgage for longer, but they will also be paying more interest, making the cumulative cost higher. How long such a trend might last will also depend significantly on whether mortgage rates drop and settle. Short-term, there appears to be no end to high mortgage rates so an increasing number are currently Livin’ On A Prayer!