21 August 2020
The US Federal Reserve’s gloomy prediction of a slow economic recovery from coronavirus weighed heavily on global stocks on Thursday (20 August). The UK’s FTSE 100 ended the day down 1.61% at 6,013.34.
SECTOR IN FOCUS
Shoppers are slowly making their way back to stores, with footfall across all retail destinations growing 0.8% in the week to 15 August, according to data provider Springboard.
Part of that increase is down to the state funded Eat Out to Help Out scheme, which offers 50% discounts in participating restaurants, Springboard said.
This will be welcome news to retailers, many of which have been unable to operate during lockdown.
While footfall was down 0.5% on the High Street, it was up 1.9% in retail parks and up 2.4% in shopping centres.
However, the recent spate of hot weather put off a lot of people from going shopping, Springboard added.
The price of goods and services ticked up 0.4 points to 1% in July as the lockdown restrictions were eased and households started to increase their spending. Rising petrol prices was one of the biggest contributors to rising inflation, which is perhaps little surprise given the increase in traffic in the past month.
Inflation is one of the key indicators tracked by the Bank of England (BoE) and can directly influence the central bank’s thinking when it comes to setting interest rates.
With inflation well below the BoE’s target of 2%, it is certainly not under pressure to increase interest rates. In fact, the BoE is actively considering introducing negative interest rates in order to aid economic recovery. However, that is still considered a long shot for the time being.
Either way, the BoE has some very big decisions to make in the coming weeks or months to ensure the economic recovery remains on track.
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