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Investment Market Update - 15 February 2022

Good morning and welcome to another day of market updates. It has been a really difficult start to the New Year, with rising inflation and interest rates aligned with the ongoing dispute between Russia and Ukraine. Markets are back up today and the Ft100 is closing in back on at 7600 as it appears the Russians have eased tensions on the border. UK wage growth continued to lag behind the rising cost of living between October and December, figures show.Wages rose, but when taking inflation into account, pay showed a 0.8% fall from a year earlier, said the Office for National Statistics (ONS). [ons.gov.uk] Latest figures also show that the unemployment rate fell to 4.1% while job vacancies hit a fresh record high. Unemployment is now "only fractionally" above where it was before the pandemic, said the ONS. According to the ONS, employees' regular pay, excluding bonuses, grew by 3.7% between October and December from a year earlier - which is high compared with rates seen over the last decade. However, the rising cost of food, energy and household goods has pushed inflation up by 5.4% in the 12 months to December. This means that real wages fell by 0.8%. Over the full year, pay fell by 1.2%. The Bank of England has warned this squeeze on workers will get worse, with inflation set to rise above 7% this year. But the ONS said early estimates suggest employers are starting to push up wages further and faster in response. Fuel prices have hit a new record high at the pump across the UK, tightening the squeeze on UK consumers, the motoring organisation the AA has said. Over the weekend petrol reached 148.02p a litre, while diesel hit a new record high of 151.57p a litre last Thursday. Fuel previously hit a record in November, before wholesale and retail prices fell back. Unilever, the firm behind brands such as Marmite and Dove Soap, has said it will put up its prices again this year as its overheads continue to rise. The consumer goods giant, which already raised prices in 2021, said the cost of some its goods would climb but it would vary from country to country. Many firms are struggling with rising raw material, wage and energy costs. Unilever said: "We don't want to put prices up but we're seeing the highest inflation we've seen in a decade. "There will be price increases on some products and in some markets but it will not be uniform across the world." Unilever, which also makes Ben & Jerry's ice cream and Hellmann's mayonnaise, said it was facing €3.5bn (£2.95bn) of extra costs in 2022 alone. It said it expected strong growth in sales this year as it raises prices, but also forecast a sharp decline in its profit margins. The price of pasta, tinned tomatoes and strawberry jam jumped last year as the cost of supermarket staples rose, new figures for the BBC suggest. Overall, the price of a basket filled with 15 standard food items rose by £1.32, or 8%, in just one year. Changes in the average cost of the food items at Asda, Morrisons, Sainsbury's and Tesco were tracked by retail research firm Assosia. Some items fell in price, with carrots and mild cheddar seeing small declines. The same basket of food made up of items from the cheaper "value" ranges at the supermarkets recorded an overall fall in price, down 45p, or 4%. But within that, items such as pasta and vanilla ice cream saw rises of more than 6%. Have a great day! Best Regards S Dhanda Head of Wealth @ ALFRED DUNN


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