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
The Daily Reckoning Australia
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About the Author
Kris Sayce began his financial career in the City of London as a broker specializing in small cap stocks listed on London's Alternative Investment Market (AIM). At one of Australia's leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.
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