BUSINESS LIVE: Inflation remains at 2%; Reckitt shaken by tornado; Babcock powered by nuclear

More than half a million people pay a marginal tax rate of 60 percent on the next pound they earn.

More people than ever are being stung by the 60 percent tax dropwhich affects people earning between £100,000 and £125,150 a year, according to Bowmore Financial Planning.

Reckitt has warned that sales of powdered baby food are likely to be hit in the short term after a tornado hit the consumer giant’s third-party warehouse in the US.

The group told investors that the Indiana facility, which is home to the Mead Johnson formula, had suffered “significant damage” but confirmed that all employees there were safe.

The warehouse in Mount Vernon is currently not operational after the tornado struck on July 9.

Rachel Reeves’ choice of words to describe the Conservative Party’s economic narrative and the timing of her intervention are odd.

‘Gaslighting’ is a trendy word with obscure origins and meanings. It has little resonance with ordinary citizens.

Labour’s plans to accelerate housebuilding and build 1.5 million new homes may be good news for first-time homebuyers, but they will strike fear into the hearts of many existing homeowners.

Fields that offer a peaceful backdrop and unobstructed views may be at risk.

There are no signs that the luxury stock sell-off will slow down.

On another bleak day for the sector, Cartier-owner Richemont and Hugo Boss were the latest fashion brands to sound the alarm over weak demand.

Ocado’s chief executive has urged disgruntled shareholders to maintain confidence in the company as sales rise and losses narrow.

Investors should have confidence in the online supermarket and technology company, despite its shares falling nearly 90 percent in less than four years, according to Tim Steiner.

“I’m not worried about investors losing confidence, because they shouldn’t,” he said. “We have a clear plan and we’re executing on that clear plan.”

Babcock has posted a 34 percent increase in annual profit, helped by strong operational performance in the nuclear, land and aerospace sectors.

The company reported underlying operating profit for the 12 months to end-March was £237.8m, with the British engineering firm reiterating its medium-term guidance.

Net debt was £435m, down £129m on the previous year, driven by strong cash flow generation.

Reckitt has warned that sales of baby food powder Mead Johnson are likely to be affected in the short term after a tornado hit an off-site warehouse in Indiana, causing significant damage.

The Mount Vernon warehouse, which is currently not operational since the July 9 tornado, is a key location for Mead Johnson Nutrition’s business, which houses both raw materials and finished products, Reckitt said.

Reckitt said: ‘While Nutrition sales are likely to be impacted in the short term, we are working closely with all our stakeholders, including customers and suppliers, to minimise disruption by leveraging our global supply chain and managing inventory in our other North American Nutrition warehouses and with our retail partners.

‘In addition, Reckitt has comprehensive property and business interruption insurance in place, which we expect will largely offset the impact on earnings.

‘We will provide you with a further update when we announce our half-year figures on July 24.’

Luke Bartholomew, Deputy Chief Economist at Abrdn:

‘Today’s inflation report will sharpen the Bank of England’s interest rate decision for August.

‘The sharp rise in hotel prices points to a so-called Taylor Swift effect on prices, but policymakers will almost certainly see through this kind of dynamic.

‘More fundamentally, given the persistence of persistent inflation in the services sector, the Bank questions how long inflation will remain at the 2% target level once the favourable base effects have faded and domestic price pressures start to drive headline inflation again.

‘Tomorrow’s wage data will provide more clues to these price pressures, and the Bank is hoping for further moderation in wage growth. For now, we still expect a rate cut in August, but that will require the coming data to cooperate.’

Matthew Chapman, associate partner at McKinsey & Company:

‘Headline inflation remains on track. However, high levels of core and services inflation are likely to cause headaches.

‘Persistent inflation in the services sector is putting upward pressure on the overall inflation rate. Price increases in summer spending areas such as package holidays (8.7%), holiday centres (10.9%) and cinemas, theatres and concerts (7.4%) are all in the high single and even double digits. And these are areas where consumers seem more inclined to splash out.

‘More than 65% of consumers plan to spend the same or more on experiences such as hotel/resort stays, short-term home rentals, out-of-home entertainment and restaurants in the coming months.

‘On the other hand, food inflation has declined significantly since the beginning of the year. And the price increases of clothing and shoes have continued to slow down, coinciding with the start of the summer sales period, which will hopefully put consumers in a better position and provide some relief.

‘But with prices still significantly higher than three years ago, many households are likely to continue to struggle and budget more for basic necessities such as fuel. They are focused on looking for opportunities to reduce non-discretionary spending by cutting back and increasing their savings.

“It may be some time before inflation is fully under control. In the meantime, companies should look for opportunities to focus on how to manage economic pressures to protect margins while delivering value to consumers.”

Data from the Office for National Statistics showed consumer price inflation held steady at the Bank of England’s 2 percent target last month.

The reading, which was slightly higher than forecasts of 1.9 percent, puts further pressure on the bank to start cutting interest rates at the Monetary Policy Committee meeting in August.