LCD TVs, Tesco and UK Inflation

We wrote previously that the strengthening Australian dollar is likely to help importers more and more as it climbs inexorably towards parity with the US dollar.

Today we note a news item from Bloomberg News that states, “Tesco Plc’s second-half profit increased 18% after the UK’s biggest retailer expanded stores and sold more flat-screen televisions and clothes.”

It isn’t just here that the craze for plasma and LCD televisions has taken off.  The UK pound sterling gained further against the Greenback yesterday as higher inflation expectations fuelled belief that the Bank of England would raise interest rates.  During European market trading the GBP breached the USD$2 mark, a level not seen in fifteen years.

Bloomberg News reported that “UK inflation unexpectedly accelerated to 3.1 percent in March, the fastest pace in a decade.”  It went on, “The inflation rate is more than a percentage point above the Bank of England’s 2% target.”

On the subject of flat-panel televisions?  The report says, “The retailer [Tesco] added 2 million square feet to its UK outlets and boosted revenue with flat-panel TVs costing as little as 130 pounds [AUD$330].”

Jonathan Said, economist at the Centre for Economics and Business Research in London, said “Retailers and manufacturers are trying to push up their margins.  The interesting thing is that they’re able to do that because people are willing to spend.”  No wonder UK inflation has blown the top off of the Bank of England’s target range.

Kris Sayce
Markets and Money

Kris Sayce

Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms. A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Markets and Money e-newsletter in 2005.
He is currently the Publisher, Investment Director and Editor in Chief of Australia's most outspoken financial news service — Money Morning.

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