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UK retail sales record biggest monthly drop since 2023

Yahoo

30 minutes ago

Business
Yahoo

UK retail sales record biggest monthly drop since 2023

By David Milliken LONDON (Reuters) -British retail sales volumes recorded their sharpest drop since December 2023 last month, as demand fell after shoppers splurged on food, summer clothes and home improvements the month before, official figures showed on Friday. Retail sales volumes dropped by 2.7% in May, the Office for National Statistics said, a much sharper decline than the median forecast of 0.5% in a Reuters poll. Sales volumes were also 1.3% lower than a year earlier, the biggest annual drop since April 2024 and well below a Reuters poll forecast for 1.7% annual sales growth. The monthly decline was mainly due to what ONS statistician Hannah Finselbach described as a "dismal month for food retailers" with lower spending on alcohol and tobacco, as well as reduced footfall at clothing stores and less demand for DIY items as dry weather had allowed work to be done earlier. "The sharp 2.7% m/m drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in Q1 is over. That said, consumer spending may still outperform other areas of the economy this year," Capital Economics' Chief UK Economist Paul Dales said. Sterling dropped by about a quarter of a cent against the U.S. dollar after the data, which came alongside government borrowing figures which showed a slightly larger than expected budget deficit of 17.7 billion pounds ($23.85 billion) for May. Britain's economy grew a faster-than-expected 0.7% in the first quarter of 2025 but shrank in April - due to the end of a property tax break and an initial hit from U.S. tariffs - and the Bank of England forecasts overall growth of 1% for 2025. April's retail data had shown robust 1.3% sales growth after demand was boosted by unusually sunny weather for the time of year and GfK consumer sentiment data for June, released earlier on Friday, showed the highest sentiment so far this year. However, reports from retailers have been more mixed. The British Retail Consortium said earlier this month that sales growth slowed sharply in May as shoppers had done much of their summer purchases a month earlier. Updates this month from major British retailers have been mixed. Tesco, the country's biggest food retailer, beat expectations for first quarter sales, despite what it called an "intensely competitive" market. However, struggling discounter Poundland said it plans to close 68 stores. ($1 = 0.7422 pounds)

So, has anything actually gotten more expensive because of Trump's tariffs?

CNN

35 minutes ago

Business
CNN

So, has anything actually gotten more expensive because of Trump's tariffs?

Predictions from mainstream economists were dire after President Donald Trump launched his tariff campaign just a couple weeks after he began his second term in office: Prices would rise — sharply — they said, reigniting an inflation crisis that tens of millions of Americans had elected him to solve. But that massive, tariff-induced inflation spike hasn't materialized. Not even close. Not yet, anyway. Consumer prices rose just 2.4%, annually, last month, according to the Bureau of Labor Statistics. That was less than economists had expected, and only slightly higher than the 2.3% rate in April, which was the US economy's lowest inflation since February 2021. According to the Personal Consumption Expenditures price index most closely followed by the Federal Reserve, core inflation — which strips out volatile items like food and gas prices — fell to 2.5% in April. That was the lowest reading since March 2021. That's a far cry from what economists and consumers have predicted. Month after month, inflation has fallen short of Wall Street's expectations, as American businesses said they would be forced to hike prices as a result of historically high tariffs. America's effective tariff rate is now 14.1%, according to Fitch Ratings, up from 2.3% last year. That means Trump raised taxes on imported goods by nearly 12 percentage points in 2025. Economists expected substantial inflation increases as a result. Goldman Sachs analysts last month said core inflation could hit 6.3% this year and consumer prices would surge 3.7% by early 2026. JPMorgan economists said core inflation would nearly double by the end of this year. And American consumers in May expected prices to rise an alarming 6.6% this year, according to sentiment surveys from the University of Michigan. That prediction fell in June, but consumers still expect inflation to hit 5.1% in 2025. So what happened? Are economists just really bad at their jobs? Not quite. Their predictions may yet come true — and economists are largely cleaving to their bets. America's economy is enormous and complex, and predicting when prices will rise and fall can be an extremely tricky business — particularly when factoring in the on-again, off-again nature of Trump's tariff regime. Still, tariffs through mid-June haven't caused inflation to spike. Love tariffs or hate them, there's no denying inflation is lower now then when Trump took office. Fed Chair Jerome Powell on Wednesday said just a few items are growing in price as a result of tariffs, including electronics that come from China. He said PCs and A/V equipment have become more expensive because of Trump's trade war. But the price increases aren't widespread yet, Powell noted, because stores are still working through the inventory that came in to their warehouses before Trump put tariffs in place. 'Goods being sold at retailers today may have been imported several months ago, before tariffs were imposed,' Powell said. Research firm Telsey Advisory Group, which has been tracking the prices of 80 select consumer items across a wide variety of retail categories, reported this week that just 19 products it has tracked have gained in price since mid-April — and 16 items' prices fell. Similarly, the New York Times' Wirecutter, which recommends consumer products, tracked the prices for 40 of its top picks over the course of two months and found this week that the vast majority didn't change price at all: 10 gained in price and only half of those gained more than 7%. 'There haven't been many significant upticks in prices as of yet given that many retailers are still selling through their lower-cost inventory,' Dana Telsey, CEO and chief research officer of Telsey Advisory Group told CNN. Even autos, many of which are subject to a 25% tariff, plus a tariff of up to 25% on some imported auto parts, haven't gained in price — they've fallen. New car prices fell 0.2% in May, according to car-buying research site Edmunds, and they rose only 2.5% compared to the pre-tariff period in March. Both new and used car prices fell in May, according to the BLS' Consumer Price Index. That's because dealers are still working through their supply of pre-tariff cars, according to Ivan Drury, director of insights at Edmunds. With prices remaining in check so far, the Trump administration has declared victory. 'They've all been discredited,' said the White House's top trade adviser, Peter Navarro, in an interview last month with CNN, referring to tariffs' detractors. 'What we got in the first term [of Trump's presidency] was not recession or inflation, we got price stability, robust economic growth and rising wages, just as we thought we would.' Navarro has frequently pointed to the low overall inflation during Trump's first term, despite his tariffs. And he's right: CPI peaked at 2.9% in mid-2018 before falling below 2% throughout most of 2019. But Navarro's assertion about the impact of tariffs on the US economy comes with a couple of significant caveats: First, Trump during his current term has already placed tariffs of at least 10% on $2.3 trillion of imported goods, comprising 71% of all US goods imports, according to the nonpartisan Tax Foundation. In his first term, Trump placed tariffs on just $380 billion worth of foreign goods. And second, the pandemic severely disrupted the global economy soon after Trump's tariffs took effect, preventing economists from getting a decent picture of how significantly prices rose. But some data shows prices gained in the specific sectors Trump targeted with his first-term tariffs. For example, after imposing some steel tariffs in 2018, US production expanded modestly, but it sent costs rising for cars, tools and machines; and shrank those industries' output by more than $3 billion in 2021, the International Trade Commission found in a 2023 analysis. Nevertheless, Joseph Lavorgna, a former Wall Street economist turned Treasury Department official, took a victory lap because inflation hasn't risen since Trump imposed tariffs during his second term. 'Tariffs have just not shown up at all in any of the data,' Lavorgna, counselor to the Treasury secretary, told CNN this week. 'The forecasting community has been completely wrong.' Lavorgna, a former SMBC Nikko Securities chief economist who also served in the White House during Trump's first term, said a broad range of inflation metrics suggests foreign producers are absorbing tariffs and that the trade war won't be inflationary. White House press secretary Karoline Leavitt echoed that message Thursday during a briefing, saying: 'America is quickly returning to the successful formula of the first Trump administration: low inflation and rising wages.' Many mainstream economists argue that the low inflation of the spring represents a calm before the summer storm, when they expect prices to rise. 'It's a question of when, not if,' Stephanie Roth, chief economist at Wolfe Research, told CNN. Walmart, Target, Lululemon, Home Depot and Costco among others have said in recent weeks that they will raise some prices because of tariff pressures. Although some of the big box retailers said they would work to keep most prices low, they acknowledged that they operate low-margin businesses, and in the cases when American-made alternatives are unavailable or more expensive, they expect that they'll have to pass some of that additional cost to their customers. Consumers won't be alone in their struggles with tariffs in the coming months, said said Sid Malladi, CEO of Nuvo, a company that manages businesses' trade partnerships. Price hikes will weigh on businesses, too, many of whom will take on some of the hit to keep prices as low as possible for as long as possible. But that could mean difficult conversations in the boardroom later this year about potential layoffs and other cost cutting. 'This is early innings. No one wants to be first out of the gate,' said Malladi. 'You don't want to risk reputational damage to your brand, because raising prices in this environment might cause customers to turn away from you. Many may eat their margin for a few months.' 'It's hard to overstate the level of anxiety businesses have,' Malladi added. Small businesses, without the supply chain mastery of larger companies, have struggled in particular to afford higher tariff costs and have said they are reducing supply or raising prices. Many have complained that American alternatives for some foreign imports may be unavailable or are too expensive. 'While larger retailers may have the scale, capital and pricing power to absorb or strategically offset these pressures, small and mid-sized players remain significantly more vulnerable, with limited flexibility to manage rising input costs or supply disruptions,' Telsey said in TAG's latest Product Pricing Analysis report. Telsey noted that prices, when they eventually start to rise, won't all gain equally or across the board. Only select goods will start to gain in price to start, likely beginning in late August or September. 'Inventory is ordered typically anywhere from six months to one year in advance, and it is expected that the select pricing pieces will begin to show up in late summer,' she said. Fed Chair Powell on Wednesday agreed that the tipping point for broad consumer price increases could come this summer as inventories of pre-tariff warehoused goods dry up. 'We do expect to see more of that over the course of the summer,' Powell said. 'It takes some time for tariffs to work their way through the chain of distribution to the end consumer.' Normally, retailers hold about 1 to 2 months' worth of inventory on items, noted Kristy Akullian, head of iShares Investment Strategy, Americas, so prices could begin to rise in the coming weeks. Another indication that prices could start to spike: In April's Institute for Supply Management services report, prices paid by businesses increased the most since November 2022, and business inventories contracted. 'Low inventories make it harder for companies to keep prices steady, so going forward, we expect the inflation impacts from tariffs to become more apparent,' Akullian said. Powell agreed with that timeline, noting companies that report on their business sentiment to the Fed have said they expect to pass those tariff costs on down the supply chain. 'Many, many companies do expect to put all or — some of the effect of tariffs through to the next person in the chain, and ultimately, to the consumer,' Powell said. 'So we're beginning to see some effects. We expect to see more.' Despite initial success at maintaining low prices, Treasury's Lavorgna conceded inflation could begin to rise down the road because of tariffs. 'I'm not saying there can't be a tariff effect on the numbers at some point,' he said. CNN's Phil Mattingly, Matt Egan and Chris Isidore contributed to this report.

Down 18%, Is Home Depot Stock a Buy on the Dip?

Yahoo

an hour ago

Business
Yahoo

Down 18%, Is Home Depot Stock a Buy on the Dip?

The housing market is still under pressure, leading to lower interest in home improvement projects. Home Depot's model has a natural hedge because even in these times, people need to do small home improvement projects. The company has diversified its supplier base to boost its leverage. 10 stocks we like better than Home Depot › Is home improvement giant Home Depot (NYSE: HD) stock a buy on the dip? If you're looking for a great value stock, Home Depot stock looks priced to buy today. The market is hovering just north of flat for the year, and there's a tentative confidence in the economy. Many tariff issues have been worked out for now, and U.S. companies are demonstrating resilience. However, it's fragile. With interest rates still high and the real estate market still low, many companies, specifically related to the housing market, are still under pressure. Home Depot has been reporting moderate performance, and it's not expecting that to let up as long as conditions remain the way they are right now. Home Depot stock is 18% off its all-time high, and investors should take a look. Mortgage rates are still high, and the real estate market is still stagnating. According to Redfin data, housing prices rose in May, while house sales tumbled 6% from last year. The national average 30-year fixed mortage rate was 6.8%, slightly lower from last year, but still elevated. This is mostly detrimental to Home Depot's business, because people invest in renovating new homes, whether big projects or small. They try to avoid investing in old homes that they plan to leave. The flip side, though, is that if they remain in their older homes, they have no choice but to fix them up to make them livable or comfortable. That provides a natural hedge against negative market forces. That was borne out in recent results, which demonstrate that customers are shopping for small projects while putting big remodeling jobs on hold. Home Depot is the largest home improvement retail chain in the world, and it has a robust omnichannel network serving individuals and pros. The vast and varied business means that it has many levers to pull to generate engagement and sales. Under any circumstances, Home Depot operates in a great industry because there's always a need for it. Management pointed out that the housing stock is aging, with 55% of U.S. homes at least 40 years old. They're most homeowners' largest asset, and these houses need work. In the 2025 fiscal first quarter (ended May 4), sales were up 9.4%, but comparable sales (comps) were roughly flat year over year. Earnings per share (EPS) declined from $3.63 last year to $3.45 this year, and the results were in line with expectations. For the full year, management is guiding for modest growth in sales and comps and a modest decrease in EPS. CEO Ted Decker noted that the company is well-prepared for whatever happens with tariffs. Half of its goods already come from the U.S., and it has diversified its supply chain over the past few years. It's continuing these efforts, and he expects that no one country will be responsible for more than 10% of its supplies in a year from now. Because of its scale and diversification, it's agile and has pricing power. Home Depot has a $1 trillion opportunity, which is recently expanded by acquiring pro supplier SRS Distribution. It opened 13 stores in Q1, which contributed to its excellent sales growth. Although it already has more than 2,300 stores in the U.S., Canada, and Mexico, it still has expansion opportunities. Home Depot is a top value stock that pays an attractive dividend. The dividend yields 2.6%, and it's increased 290% over the past 10 years. At the current price, it trades at a price-to-earnings (P/E) ratio of 24. That isn't super cheap, but it's around recent averages. This is what the market thinks Home Depot is worth, because it's reliable for strength and passive income, and it's likely to get back into growth mode under better circumstances. If you're looking for a top value stock to buy on the dip, Home Depot is an excellent option. Before you buy stock in Home Depot, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Home Depot wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool recommends Redfin. The Motley Fool has a disclosure policy. Down 18%, Is Home Depot Stock a Buy on the Dip? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

How could Canada's pension fund invest more at home? Finance committee chair wants to know

CBC

2 hours ago

Business
CBC

How could Canada's pension fund invest more at home? Finance committee chair wants to know

Social Sharing Canada Pension Plan managers face the prospect of hearings by the House of Commons finance committee after MPs learned that only a small fraction of the public pension plan's billions of dollars of assets are invested in Canada. Liberal MP Karina Gould, the newly elected chair of the committee, said it is important for the CPP to be managed effectively but she would like to know why the fund that provides retirement benefits for most Canadians isn't investing more in the domestic economy. "It is concerning," Gould said Thursday. She said she wants to understand why so little is invested in Canada and how the public pension fund could not only "bolster the Canadian economy, but also support Canadians and their pensions." Gould said the committee will be busy holding pre-budget consultations and examining Bill C-4, which includes a tax cut for Canadians. However, if committee members agree, she said hearings into the Canada Pension Plan could take place in the fall. "In this economic moment that we're in, it's really important that we have an understanding of, you know, where our pension funds are investing," Gould said in an interview. "It's definitely something that could be of interest to the committee." Gould said committee hearings could also look at the CPP's mandate and whether it should more closely resemble the double mission of the Caisse de dépôt et placement du Québec — the province's public pension manager that is charged with both making money and investing in Quebec's economic development. "It's an interesting question to explore," she said. Gould's comments come after the Canada Pension Plan Investment Board (CPPIB), also known as CPP Investments, revealed that just 12 per cent of the CPP's assets are invested in Canada — its lowest level ever. The largest chunk of its $714-billion fund, 47 per cent, is currently invested in the United States — its highest level ever. The revelation has raised questions about whether the CPPIB should be investing more in Canada while the country is in the midst of a trade war with the U.S. Those who support the high level of investment in the United States by the CPP, including the CPPIB itself, argue the plan's mandate is to make money. They argue U.S. investments offer more diversity and higher returns — which help ensure the plan will be able to pay out benefits for years to come. Others, however, question why the plan isn't doing more to invest in Canada to create Canadian jobs and infrastructure projects. They are also concerned about the plan's exposure to the U.S. at a time when President Donald Trump's administration has made the country a riskier place to invest. Like Gould, the NDP's interim leader leader and finance critic Don Davies was surprised to learn that the CPP's investment in Canada had dropped to 12 per cent. "I think it's alarming. I mean I think it's only 12 per cent of, you know, such an incredibly large fund of monies that are paid by Canadian employees and Canadian employers," he said. While Davies says the fund is well managed, he wants the government to review the CPPIB's mandate. "I personally think [the mandate] should be expanded to also include development of the Canadian economy," he said. "There's no shortage of projects that will strengthen our economy and also give good returns to workers and employers," Davies said. "I think Canadians would be surprised to learn that their own pension monies are being used to invest in other countries in such a vastly disproportionate way than in their own country." Davies said he would welcome hearings on the issue by the finance committee, of which he is not a member.

Wall Street Journal