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UK inflation predicted to hit major milestone on Wednesday - could this lead to rate cut this week?
By James Sillars, business reporter
We're entering what could be the most crucial 48 hours of the election campaign for the economy.
There are two closely watched events ahead: the inflation figures for May (released early on Wednesday), followed the next day by the Bank of England's last interest rate decision before polling day.
The latter hinges on the former, in terms of potential excitement.
The consensus view is that the rate of inflation will ease back to the Bank of England's target of 2% for the first time since spring 2021.
That should be enough for the Bank of England to act the following day, you may well think. Job done?
Borrowers across the country are crying out for a rate cut after several false dawns in the fixed-rate mortgage market since we first really started talking about the prospects for rate cuts at the start of the year.
A reduction from 5.25% to 5% by the independent central bank would also be welcome for the Conservatives.
But here's where, from the view of economists and financial markets, the fairy tale for voters and the government hangs in the balance.
Even if the inflation rate hits the Bank of England's target this week, just 9% of the market currently expects the Bank of England to cut on Thursday.
That figure could change if the inflation number comes in lower than expected but the prediction is based on the future path for inflation rather than the present number.
Bank policymakers have repeatedly voiced worries over indicators showing a pick-up in the pace of price increases during the second half of the year.
They are concerned too that wage growth, running stubbornly at 6% annually at the moment, risks stoking demand in the economy and therefore inflation further.
Without these factors falling out of consideration, the majority on the rate-setting committee will likely continue to say it's too early to release the chokehold on inflation.
There is also a school of thought that the Bank would be reluctant to act during an election campaign.
So, these two events ahead are unlikely to rock the boat politically, or light up your finances to the extent the Bank of England has seen enough to fire the starting gun.
There is certainly the chance of a surprise on Thursday but it would take a pretty big shift for that pistol to light up the race for Number 10.
What is inflation?
Basically, inflation is the rate at which prices are rising.
It directly affects our overall cost of living and, if wages are not increasing at the same pace, the value of your money decreases.
It is impacted by lots of different factors including global conflicts - with the Ukraine war having a huge impact on food and gas prices in recent years. Some argue Brexit also had a negative impact.
In the UK, inflation is measured monthly - comparing how much prices are going up with the same time a year previous.
The headline inflation figure, which you'll see a lot in the news, measures price rises across a range of products that we need in our daily lives.
The most commonly used inflation index is the Consumer Price Index (this is the update at 7am today) - and the target for many Western governments is 2%.
One thing to note is that falling inflation doesn't mean prices are coming down - just that they're rising less quickly. You'd need a minus figure, or negative inflation, to see prices fall overall.
Why does inflation impact interest rates?
The Bank of England raises interest rates to try to slow spending and encourage saving - when this happens prices/inflation tend to come down.
When inflation falls, interest rates tend to.
Potential winners and losers from high inflation
Overall, a high and volatile rate of inflation is widely considered to be damaging for the economy – but there are some people who could benefit from it.
Workers with wage bargaining power (perhaps those who belong to strong trade unions) can come off better as they can protect their incomes by bidding for higher wages.
Producers could end up benefitting if their prices rise quicker than their costs.
People with stocks or property could also see the value of their assets rise if there is a sustained period of price inflation.
However, retired people on fixed incomes are likely to be worse off as inflation cuts the real value of their pensions and other savings.
The poorest members of the population will also feel the pinch more as costs of borrowing, food and domestic utilities are high.
Doctors want drink-drive limit cut | Grocery inflation falls | Business investment in UK 'rock bottom' of G7
Doctors are calling for the drink-drive limit to be reduced to the equivalent of a small glass of wine or beer.
The limit in England, Wales and Northern Ireland is the highest in Europe at 80mg ofalcoholper 100ml of blood. In Scotland it is 50mg.
The British Medical Foundation, the trade union for doctors, has said it will lobby the next government to reduce the limit to 50mg - and 20mg for new and commercial drivers.
Read the full story here...
Grocery inflation has eased for the 16th month in a row, according to industry data released ahead of the general election.
Kantar Worldpanel - which tracks supermarket till prices, sales and market share - said its measure of grocery inflation slowed to 2.1% in the four weeks to 9 June from 2.4% the previous month.
Read the full story here...
The UK had the lowest rates of business investment out of all G7 nations for a third year in a row, a new report has claimed.
The economies of the US, Canada, France, Germany, Italy and Japan are all said to have attracted higher levels of funding from the private sector - as a percentage of gross domestic product (GDP) - in 2022.
The Institute for Public Policy Research (IPPR), which carried out the research, said the ranking was important because investment in things like new factories, equipment and innovations helped boost economic activity, wages and household incomes.
Read the full storyhere...
Energy certificates 'unreliable' and in 'desperate need of reform'
House buyers or renters should be familiar with being handed an Energy Performance Certificate (EPC) when surveying a property.
In theory, they offer insight as to how efficienta building is - except consumer champion Which? doesn't think so.
Its experts argue that the certificates are "unreliable" and that the next government urgently needs to reform the system.
It may not seem like the end of the world - but access to grant funding, or green financial products such as loans or mortgages, is often available only to those who meet certain EPC-based criteria.
Additionally, a better EPC can make a big difference for owners, as it allows them to command a higher price if they choose to sell and may make the home more attractive to tenants.
The consumer magazine selected homeowners and booked EPC assessments on their behalf.
"Which? uncovered issues with the accuracy of the results and the recommendations that homeowners received," it said.
"Most participants (eight out of 11) told Which? their EPC did not appear to be accurate - they said the descriptions of key aspects of their home like the windows, roofs and heating systems were incorrect."
Tesla rival files for bankruptcy amid wider EV sales slump
An electric vehicle company looking to rival Tesla has filed for bankruptcy amid a wider sales slump in the industry.
Fisker filed a bankruptcy petition in Delaware yesterday after after failing to secure investment, announcing weaker-than-expected earnings and plans to cut 15% of its workforce.
The company, started by James Bond car designer Henrik Fisker, announced plans in March to cut prices by as much as 39%, while its share price has plummeted by 99% in recent days.
This comes as electric vehicle sales in the US and Europe continue to drop.
Smoke machines deployed in Tesco to fight nighttime break-ins
Smoke machines are the latest gadgets being introduced into supermarket shops to fight crime.
Tesco has deployed them in some stores to stop thieves breaking in after-hours, Sky News understands.
The 4ft security machines - arranged on the shop floor after closing - fill the room with a dense fog if motion detectors are tripped.
"Warning: You're being watched. Smoke screen security fog in operation," reads a message on the front of the device, which is fitted with a CCTV camera.
Sky News understands the unit pictured above was not plugged in and has been removed after being mistakenly left out during opening times.
While the deterrent has been rolled out in some high-risk branches, they are not part of a universal policy.
A customer who saw the device said: "The size and visibility of the machine, along with the prominent camera, and the pair of eyes and 'We're watching you' decals, highlight its use as yet another part of the culture of fear visited on the most vulnerable in our society during this cost of living crisis."
Tesco has declined to comment.
Interest-only mortgages – are they an option for you?
Basically... it's a little "what it says on the tin", but an interest-only mortgage is an agreement where you pay only the interest owed on your loan each month.
Popular in the 1980s and 90s, and peaking just before the 2008 financial crisis, interest-only mortgages benefit those who are trying to keep their monthly payments down in the short term.
How does an interest-only mortgage work?
You only pay off the interest on the amount you borrow - not the loan itself.
This differs from more common repayment mortgages which see you pay off the interest and some of the capital on your home each month, eventually leading to the mortgage being paid off at the end of the term.
With interest-only, you'll have to pay off the total amount borrowed in full at the end of your mortgage term using savings, investments or other assets.
You can also find temporary arrangements if you are struggling financially.
Example:You're looking at a house which requires you to borrow £100,000 over 25 years with a fixed interest rate of 3.5%.
Imagining this interest rate stays the same for the whole term, on a repayment mortgage plan your monthly cost would be£501, while on interest-only it would be significantly lower at£292.
The interest-only option is great for those who want to keep their outgoings in check - but it does mean that, as the capital isn't being paid down, the amount of interest ends up being higher than on the full repayment plan.
Therefore someone on an interest-only deal would owe£187,579(£87,579 interest plus £100,000 loan capital outstanding), while a repayment deal would see them pay back£150,238(£100,000 loan capital fully paid off plus £50,238 interest).
How easy are they to come by?
As we touched on earlier, prior to the 2008 financial crisis interest-only mortgages were much easier to get hold of - some 40% of all mortgages taken out were interest-only around this time.
But the crash revealed that many loans were at risk with customers who would struggle to pay off the full loan later down the line.
Affordability criteria were introduced as a result, which caused their popularity to sharply decline. It's now quite difficult to borrow on an interest-only basis, with not all lenders offering them as an option.
Those that do will have strict terms, such as a high deposit and an approved plan to pay the loan back at the end of the term.
Research by the Financial Conduct Authority in August last year revealed that the number of interest-only and part-interest-only mortgages had halved since 2015.
What are the benefits?
The biggie with interest-only mortgages is the reduced monthly payments, which can provide you with a financial safety net if you go through times when you're earning less.
There's also a chance that if you're in your property for a long time, you could sell it for more than you paid for it, meaning you've built up equity to help you pay off the lump sump.
What about the downsides?
You're not paying off any of the loan as you go, meaning you're not building up that equity that you would do with a repayment mortgage. You'll also end up paying more interest due to not making a dent in the capital.
Interest-only also means you need a solid plan for paying it off at the end of the term - this may include constant monitoring of investments and being strict with yourself to ensure you're putting money aside. With a repayment plan you don't need to think about this element.
Read other entries in our Basically series...
Deliveroo 'Diamond' subscription launches - but its not open to everyone
An invitation-only "Diamond" Deliveroo subscription has launched, offering priority delivery, dedicated customer care teams and access to restaurants unavailable to other consumers.
For £19.99 per month, users get 10% credit back on orders of £30 or more and an on-time promise - meaning if an order arrives more than 15 minutes late, customers get their money back.
Only the very top users of the app will be invited to subscribe - with members estimated to spend three times as much as regular customers and twice as likely to try a restaurant that was new to the platform.
"The enhanced loyalty programme will play an important role in driving growth for Deliveroo," the company said.
Chip shop named in Europe's best cheap eats
A London fish and chip shop has been named in the top 100 best cheap eats in Europe.
The Mayfair Chippy comes in at 87 in the respectedOpinionated About Dining list - which is widely shared by top chefs and which draws conclusions based on tens of thousands of reviews from foodies.
As far as chippies go, Mayfair isn't actually that cheap - a cod and chips will set you back over £19...
The top UK entry is bakeryFabrique at 25 - and most things in its central London branches cost less than a fiver.
Pollen Bakery in Manchester, where you can easily eat for less than £10, is at 54 - withSt John's Bakery (Neals Yard), in London, famous for its donuts, is at 57.
Jolene bakery in Newington Green, London, which has a daily changing menu, is at 59 - ahead of ramen joint Kanada-Ya, which has branches in Angel, Soho and Covent Garden.
Lots of other London eateries make the lower end of the top 100 - which is topped by Oslo coffee bar Tim Wendelboe.
What's your favourite cheap eat across the UK? Tell us in the comments box and we may follow this up later
