BUSINESS LIVE: UK inflation rises to 2.2%; Balfour Beatty earnings leap

(PA) – Insurance giant Aviva has revealed higher sales and profits on the back of “excellent trading” over the past six months.

The London-listed company said it was buoyed by a jump in UK general insurance premiums, while sales from its retirement division dipped.

It reported an operating profit of £875million for the first half of 2024, up 14% on the same period a year earlier. This was ahead of analyst expectations.

The company reported that general insurance premiums grew by 15% to £6billion across the whole group, with an 18% rise in the UK and Ireland.

Premiums in the UK and Ireland rose as higher pricing and new propositions helped drive a 30% increase for personal lines insurance, with commercial lines up 10%

Aviva also benefited from 49% growth in its protections business, driven by its acquisition of AIG Life earlier this year.

Group chief executive Amanda Blanc said: “Sales are up, operating profit is up, the dividend is up. Our plan to deliver more for customers and shareholders is working really well.”

They were 10.6 per cent higher at £162.05 by 10am on Wednesday morning, making them the biggest riser on the FTSE 100 Index.

Danni Hewson, head of financial analysis at AJ Bell, comments on Balfour Beatty’s results:

The company has delivered a solid set of half year results with optimism threaded through the update like a stick of rock.

If anyone needed a visual of the scale of the projects the company delivers, they just need to look at images out of Birmingham overnight where a massive bridge spanning the new HS2 line was eased into place.

These are the kinds of projects that improve our journeys, make us more productive and, importantly, add to economic growth.

Profits were up a touch, and the order book has been padded out. There are still huge budgetary barriers to major infrastructure investment in the UK but longer term the government has been clear that ‘getting Britian building again’ must be at the heart of the country’s future, and that’s something Balfour Beatty believes will be a boon to it and its shareholders.

Victoria Scholar, Head of Investment at Interactive Investor, said: UK annual inflation hit 2.2% in July, rising from 2% in May and June and marking the first increase since December.

But this was slightly better than expected – analysts had pencilled in a rise to 2.3%. The monthly figure also beat expectations, falling 0.2% versus forecasts for a 0.1% drop. Annual core CPI rose by 3.3% and services sector inflation hit 5.2% – both lower than anticipated.

As a result, the pound moved lower against the US dollar after the data. Housebuilders like Persimmon, Barratt Developments, Taylor Wimpey and Land Securities have jumped towards the top of the FTSE 100.

Nicholas Hyett, investment manager at Wealth Club, said:

Economists had expected a bit of an inflationary heatwave over the summer, as the effects of lower food and energy prices started to drop out of the numbers and core inflation continued to run hot.

In the event, the inflationary heat has picked up a bit, but not quite to the degree that had been feared.

Crucially core inflation continues to fall steadily and is now at its lowest level since September 2021. It’s this number which is key to the long term outlook for the UK and which will drive Bank of England interest rate decisions. All economies are buffeted by global commodity prices, it’s domesticely generated inflation that policy makers focus on.

Services inflation remains higher than you might like, at 5.2%, although did fall thanks mainly to a substantial fall in hotel costs year-on-year.

As a labour intensive industry, hotel prices can be a bit of a bellwether for the wider labour market – so softness here, coming after lower wage growth yesterday, will be reassuring. The Bank is probably feeling pretty pleased about the timing of its first rate cut at the moment.

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the latest inflation figures:

Higher inflation has had the most highly anticipated comeback since Abba, after the Bank of England repeatedly flagged that it was on the way, and that it wasn’t anything to get inordinately concerned about.

This is no Waterloo. It actually came in marginally behind expectations, because economists were pencilling in a 2.3% rise.

It’s not massively welcome, especially for people hoping to be able to enjoy the new space in their budgets created by wage rises, but it’s not a huge upset either.

It’s likely to be business as usual at the Bank of England in September, with rates on hold, so it’s unlikely to alter the picture significantly for savers and borrowers.

Finally, investing in Britain is back in vogue! A day after India’s wealthiest telecoms tycoon bought a chunky stake in BT comes a new poll showing the London Stock Exchange is the favourite of all of Europe’s stock markets, streets ahead of Germany and well above France and Spain.

What’s more, the Bank of America survey says investors now view London’s top blue-chip stocks as safe bets due to their defensive nature, particularly in volatile times.

The London stock market is now the top choice among European investors while sentiment towards the single currency bloc collapses.

In a major vote of confidence in Britain, a survey by Bank of America found increasing numbers of investors plan to buy UK-listed shares over the next year.

The crisis engulfing Asda has deepened amid a summer slump at the private equity-owned supermarket.

In a bleak update, research group Kantar said Asda sales tumbled to £4.26billion in the 12 weeks to August 4, down 6 per cent on the same period in 2023.

When America sneezes the rest of the world catches a cold – it’s the oft-quoted adage that reflects both the dominant role the US economy plays across the world, and the importance of its share and bond markets to the wealth of investors everywhere.

Well, in the past few days it may not yet have sneezed, but there are certainly sniffles.

AstraZeneca has become the first UK firm to be valued at £200billion as its ambitious push into developing a pipeline of cancer drugs pays off.

In another boost for chief executive Pascal Soriot, as well as an army of investors, shares in the pharmaceuticals giant rose 1.1 per cent, or 140p, to a record 12,920p close.

Inflation rose above 2 per cent in July in the first increase this year, official figures have shown.

The Office for National Statistics said the rate of Consumer Prices Index (CPI) inflation rose to 2.2 per cent in the 12 months to July, up from 2 per cent in June.