BUSINESS LIVE: Inflation slows to 1.7%; Whitbread eyes £300m profit boost; Just Eat hit

LVMH shares have slumped 7 per cent on the French market, while domestic rival Kerring is also trading lower.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘After years of runaway price rises, inflation falling below 2% will come as huge relief to consumer and companies, lifting expectations for further two interest rate cuts this year.

‘The last time inflation was below 2% was in April 2021 as the country had just emerged from the third lockdown and strict social distancing measures were in place, squeezing demand.

‘The numbers demonstrate that there was more caution than expected when it came to spending in September, with travellers a lot more reticent to shell out for expensive air fares.

‘There was a notable dip in ticket prices compared to September 2023, after what appears to be a last hurrah of spending in August, when prices were a lot higher than a year ago. This may be a symptom of increased nervousness as the UK Budget looms.

‘Price cuts at the petrol pumps have also, as expected driven inflation lower, on the back of a drop in the oil price during the month. Inflation is now lower than forecast by the Bank of England, but there are still some expectations it could pop up again in the months to come.

‘However, it does seem as though the fight against insidious price rises has been won, and combined with slowing wage growth, financial markets have piled on the bets for a rate cut in November with the chances now being put at more than 91%.’

Business is booming at Boots as its boss completes a swathe of store closures before he leaves.

The pharmacy giant said sales in the three months to the end of August were 6.2 per cent higher than in the same period a year earlier as premium beauty and skincare products flew off the shelves.

LVMH has suffered its first quarterly sales drop since the pandemic after a slowdown in demand for high-end fashion.

The French group, whose brands include Givenchy, Celine and Louis Vuitton – where actress Zendaya is a global ambassador – posted a 3 per cent drop in sales for the three months to September.

It was the first decline since sales tumbled at the start of 2020 when Covid-19 struck.

Zoe Gillespie, investment manager at RBC Brewin Dolphin:

‘It’s a mixed set of results from Whitbread on the face of it, but the long-term story for the company is about growth – even if there are some short-term challenges in the form of softer demand in the UK and a slowing German economy.

‘Premier Inn is a well established and highly cash generative brand in the UK and it continues to make strong progress in Germany, with profitability from the latter approaching in the not-too-distant future.

‘Management’s confidence is reflected in its expectations around profitability, investment, and buybacks, with £2 billion expected to be delivered across these areas by 2030.

‘While the shares have yet to really recover to their pre-pandemic levels, and are down on a year ago, the company’s five-year plan provides a good foundation on which Whitbread can build its recovery.’

Just Eat Takeaway has seen gains in key markets of Northern Europe, the UK and Ireland largely offset by recent sharp declines in its growth markets of North America, Southern Europe and Australia.

The meal delivery firm posted a 4 per cent decline in gross transaction value for the third quarter to €6.34billion, below analysts’ consensus of €6.5billion.

Australia and Southern Europe saw a GTV decline of 11 per cent for the period, while North America slumped 12 per cent.

Boss Jitse Groen said: ‘We made good progress across our key strategic pillars, which we believe will drive growth.

‘Northern Europe and the UK and Ireland continued their positive momentum, and these segments now represent circa 60% of the Group’s total orders. In line with our strategy to diversify, several new partnerships were launched across adjacencies like grocery, pharmacy and wellness in many of our markets.

‘Furthermore, cost and operational efficiencies have allowed us to increase investments while maintaining our outlook. We are well on track to deliver our guidance for the full year.’

Premier Inn owner Whitbread has set a target of at least £300million more profit and over £2billion for shareholder returns in the next five years.

It comes after the hospitality group saw first-half profits slump, with adjusted pre-tax earnings down 13 per cent year-on-year to £340million in the six months to 29 August.

Whitbread chief executive Dominic Paul said: ‘We are making excellent progress with our plans and over the next five years are set to deliver a step change in our performance which will fund significant returns to shareholders.

‘Demonstrating our confidence, we have today announced details of our Five-Year Plan that sets out the scale of our ambition to FY30.

‘Having laid the foundations for future growth, we are executing at pace and remain confident in the outlook as reflected by our increased interim dividend and further share buy-back.’

Total public debt across the world will top $100 trillion (£77 trillion) for the first time by the end of this year, according to a stark forecast by the International Monetary Fund (IMF).

As Rachel Reeves struggles to make her Budget numbers add up, the global watchdog said governments must act now to prevent debt spiralling further out of control or risk having to take even more painful action in future.

Its projections see global debt reaching 93 per cent of gross domestic product (GDP) by the end of this year and 100 per cent by 2030.

Thomas Pugh, economist at RSM UK:

‘The drop in inflation to 1.7% leaves it a whopping 0.4ppts below the last MPC forecast. While the slowdown was driven by lower airfares (11.9% to -5.0%) and fuel (-3.4% to -10.4%), services inflation dropped back to 4.9%, its lowest reading since May 2022, and core inflation dropped to 3.2%.

‘Admittedly, inflation will rebound later this year as favourable base effects fall out of the annual comparison, some of the more erratic factors that pulled down inflation in September unwind and energy prices move higher.

‘But this morning’s data is clear evidence that disinflation is continuing to move through the economy at pace, and should reassure the Bank of England that it can move to cut interest rates more aggressively without stoking higher inflation.

‘Finally, the drop in inflation will come too late to help out the Chancellor at the budget, as September’s inflation rate is one factor used in setting next year’s benefit payments. But a much larger budget than expected, combined with higher borrowing, could keep the MPC cautious, despite the more positive outlook on inflation.’

Hetal Mehta, head of economic research at St. James’s Place:

‘The fall in UK inflation is very broad-based, and for the BoE, the core inflation and services inflation numbers in particular will be good news.

‘They should consolidate the expectations of a cut in November and perhaps the vote split will narrow.

‘As for back-to-back cuts, I think more evidence of a continued decline in inflation is needed before we see this and suspect the BoE will also want to have a more time to digest the Budget announcements.’

Consumer price inflation eased more quickly than expected in September, falling from 2.2 to 1.7 per cent, data from the Office for National Statistics shows.

Last month’s inflation reading was below market expectations of 1.9 per cent and boosts the case for further Bank of England interest rate cuts in November.