The owner of John Lewis and Waitrose is planning to cut 1,000 jobs in stores as part of an effort to cut costs, my colleague Sarah Butler reports.

The John Lewis Partnership (JLP) said it would aim to find new jobs for those losing their store management roles and would aim to reduce compulsory job cuts by offering voluntary redundancy to those affected.

The group said it was simplifying its store management structures under a plan to reduce costs by £300m a year by 2022.

JLP vowed to reduce costs after reporting its first full-year loss in March and ditching its annual staff bonus for the first time in 67 years.

A JLP spokesperson said:

“We have announced to our [staff] our intention to simplify our management structures in Waitrose and John Lewis stores, which will allow us to reinvest in what matters most to our customers.”

The job cuts, first reported in the trade journal Retail Week, come after a tough few years for the staff-owned group, which employs more than 80,000 people. It has closed 16 John Lewis stores, including major outlets in York, Peterborough, Sheffield and Aberdeen, with the loss of more than 2,500 jobs.

JLP announced it was cutting a further 1,500 head office jobs in November last year. It has also axed one in three senior head office management posts – 75 out of 225 – as part of a reorganisation announced in 2019.

John Lewis and other department stores have been hit particularly hard by changing shopping habits as well as the Covid-19 pandemic, which forced non-food retailers to close their doors for many months.

The switch to online shopping, increased competition and the heavy costs including business rates associated with large premises have led to the demise of several rival department store chains.

Debenhams now trades only online, while Beales has closed all but a handful of stores. House of Fraser has cut back its store numbers by about a quarter.

That’s all for today. Here’s our other stories:

Goodnight. GW

The owner of John Lewis and Waitrose is proposing to cut around 1,000 jobs in a store management shake-up, in another blow to the UK’s retail sector workforce.

Parent company John Lewis Partnership says the proposed 1,000 redundancies would fall across its Waitrose supermarkets and John Lewis department stores, as it simplifies its management structures.

The company said the restructuring plan would allow it to reinvest in customer service and improve its shops. The proposal doesn’t include any new store closures.

Press Association has more details:

It comes after a raft of recent job cuts, which included the closure of eight John Lewis stores earlier this year, in a bid to secure £300m in savings by 2023.

A John Lewis Partnership spokesperson said: “We have announced to our partners our intention to simplify our management structures in Waitrose and John Lewis stores, which will allow us to reinvest in what matters most to our customers.”

Retail Week says:

Department store group John Lewis and sister business Waitrose have proposed 1,000 redundancies in stores, Retail Week can reveal.

Parent John Lewis Partnership informed partners of the plan on Wednesday morning, and said that the changes would make the business more competitive and enable it to better serve shoppers.

The John Lewis Partnership was badly hit by Covid-19, slumping to a £517m loss for 2020 after shutting its department stores during the pandemic and facing rising costs.

It shut eight department stores in 2020, and earlier this year it confirmed plans to permanently close eight more outlets, including department stores in York, Peterborough, Sheffield and Aberdeen, with the potential loss of almost 1,500 jobs.

There are reports that the standoff between the United Arab Emirates and the rest of the Opec+ group has been resolved, breaking the deadlock over the group’s output plans.

Under the agreement, the UEA would be given a higher output quota under the existing production cuts deal, allowing it to pump more.

The deadlock had prevented Opec+ from agreeing to raise production over the coming months, threatening either a painful supply shortage (pushing prices up) or the collapse of its agreement.

Reuters has the details:

Saudi Arabia and the United Arab Emirates have reached a compromise over OPEC+ oil policy, giving the UAE a higher production baseline and paving the way for extending a pact on remaining supply curbs to the end of 2022, an OPEC+ source said on Wednesday.

The UAE’s baseline, the level from which cuts under the OPEC+ agreement on supply curbs are calculated, will be 3.65 million barrels per day from April 2022, the date when the existing pact had been due to expire, the source said.

The Organization of the Petroleum Exporting Countries, Russia and their allies, a group known as OPEC+, still need to take a final decision on output policy, after talks this month were abandoned because of the Saudi-UAE dispute.

It was not immediately clear if other countries would also adjust their baselines.

The dispute between Riyadh and Abu Dhabi had spilled out into the open after the OPEC+ talks, with both airing concerns about details of a proposed deal that would have added an extra 2 million barrels per day (bpd) to the market to cool oil prices that have recently climbed to 2-1/2 year highs. ...

Here’s some reaction:

It’s been a subdued morning in the European stock markets, with worries about inflation and the strength of the global recovery weighing on shares.

The FTSE 100 index of blue-chip shares is down 32 points, or 0.45%, at 7092 points. Mining stocks and banks are among the risers, with Glencore up 1.5% and Lloyds gaining 1%.

But the stronger pound is pulling down multinationals (it makes their overseas earnings less valuable in sterling terms).

Travel stocks are also weaker, again, with airline IAG and jet engine maker/servicer Rolls-Royce both down 2%.

Among smaller companies, TUI has slumped by 7% and easyJet are down 3.5%, following reports that Spain’s Balearic islands are likely to be moved from England’s travel green watchlist to amber.

That would mean passengers returning from popular holiday destinations like Ibiza, Mallorca, Menorca and Formentera would have to quarantine on their return.

European stocks are also lower, with the Stoxx 600 down 0.2%.

Pierre Veyret, technical analyst at ActivTrades says:

Shares slid slightly lower after the opening bell on Wednesday, driven down by travel and leisure stocks as Delta variant worries continue to weigh on market sentiment.

Most benchmarks are now testing their short-term major support levels, in a pull-back move, after this morning’s slew of solid inflation data from Spain and Sweden following yesterday’s spike in US data.

Worries over rising prices remain the most important market driver this week with many investors questioning the “transitory” effect first described by the Fed.

Barratt Developments, Britain’s biggest housebuilder, has forecast it will make more than £800m in annual pre-tax profits, as it benefits from the housing market boom and buyers’ rush to complete purchases before the end of the stamp duty holiday.

The company said strong demand for new houses around the country would enable its full-year pre-tax profits, after adjusted items, to reach the top end of analysts’ expectations, which where between £761m and £821m.

It also highlighted “a modest increase in the proportion of larger family homes” in its forward sales order book – a further sign that homebuyers are adjusting their priorities in the wake of the coronavirus pandemic.

The housebuilder said its completion levels had bounced back from the pause in construction during the first wave of the pandemic, with it finishing the building of 17,243 homes in the 12 months to 30 June, more than previously forecast. Significantly more homes were completed than a year earlier, but the figure was slightly lower than two years previously....

Over in the eurozone, factory output has dropped by more than expected, raising questions over the strength of the recovery.

Seasonally adjusted industrial production fell by 1.0% in the euro area in May, and by 0.9% in the EU, date from eurostat shows.

Production of non-durable consumer goods in the eurozone fell the most, by 2.3%.

Energy fell 1.9%, heavy-duty capital goods by 1.6% and intermediate goods by 0.2%, while durable consumer goods rose by 1.6%.

Karl Thompson, CEBR economist, says supply chain disruption is leaving factories short of supplies.

“After eurozone industrial production growth exceeded expectations on the upside in April, today’s figures for May came in gloomier than expected.

Whilst the continued easing of restrictions in the euro area is contributing to a recovery on the demand-side, industrial shortages are creating turbulence. Cebr expects 5.0% eurozone GDP growth this year.” –

Here’s some reaction to the 10% jump in UK house prices in the year to May.

Tom Bill, Head of UK Residential Research at Knight Frank:

“Despite house price growth reaching double-digits, the second half of the year is unlikely to bear much resemblance to the first half for the UK housing market. We expect growth to fall to mid-single digits as tax breaks wind down and supply picks up. Comparisons with the global financial crisis are misleading given how low interest rates remain and the fact the mortgage market acts as more of a brake and less of a lubricant for housing market activity than it did in 2007.

“House prices were driven higher by a supply squeeze as the UK came out of the pandemic, an effect seen in other sectors of the economy. If you add in a stamp duty holiday and the fact pent-up demand had been building for five years against the uncertain backdrop of Brexit, the result was a burst of house price inflation. In what may be a sign of things to come in the UK, housing market activity is now beginning to moderate in North American markets as the distortive effects of the pandemic recede.”

Roger Evans, Director of Home Finance at Gatehouse Bank, comments:

“House price growth has returned to form, bouncing back from the one-off fall in April, and we expect a further rise next month as the full impact of the stamp duty holiday extension emerges.

“Even with the biggest tax savings now behind us, there are no indications prices are going to slip back to where they were before the pandemic.

“Mortgage approvals – a primary indicator of how active the market is - still surpass pre-pandemic levels, highlighting that the stamp duty holiday is no longer the primary driver for home purchases.

“The biggest question mark is whether supply will increase and start to keep pace with that demand. Different parts of the country will have very different stories to tell in this regard, and London still shows the weakest price growth.

“However, the anticipated opening up of international travel later in the year will open doors for overseas investors to potentially re-enter the market in the UK’s major cities, and this could bring London back into line with the rest of the country.

Jonathan Hopper, CEO of Garrington Property Finders,

Such rapid price growth cannot continue forever, and this data may well have captured the high-water mark of price inflation.

“With the Stamp Duty holiday now ended in Wales and Scotland, and tapering away in England and Northern Ireland, the temporary stimulus it provided is fading fast.

“From here on in, prices are likely to be driven by the more conventional market dynamics of demand and supply.

“Demand remains very robust. Even without the extra carrot of a Stamp Duty saving, thousands of would-be property buyers are still asking themselves the question ‘if not now, when?’

“Buyer demand continues to outstrip the supply of homes for sale in many areas, and this is pushing up prices as buyers compete for the most desirable properties.

“But while estate agents remain as busy as ever, buyers are becoming increasingly realistic rather than romantic in what they’re willing to pay.

Lucy Pendleton of estate agents James Pendleton:

“The latest UK HPI figures reflect sales that completed in May when buyers were still enjoying the full Stamp Duty holiday. At that time, the atmosphere was frenzied as buyers sprinted to complete sales before the end of June.

“Price growth has cooled a little since the deadline has passed, but the cliff-edge scenario many were predicting hasn’t played out. Prices haven’t collapsed, very few transactions have fallen through and we are seeing a healthy level of new instructions.

“This can be attributed to a number of factors. The race for space in many areas of the country hasn’t abated and demand remains at levels we were seeing several months ago.

“There’s still a lack of good quality stock coming onto the market, which means buyers are less worried about missing out on the full tax benefit as they are on a particular property. If anything, it’s a minor inconvenience for buyers, and not critical enough to derail transactions.

“The Stamp Duty break tapering off, rather than being cut off immediately at the end of June, has also avoided the prospect of a wave of transactions collapsing near the finishing line.

“Buyers don’t feel under pressure to complete and sellers feel more comfortable about listing knowing transactions aren’t likely to fail, and I don’t see that changing even as we approach the end of September, when the tapered relief ends.

“We are also expecting to see a buoyant market over the summer, when typically activity drops off. With the majority of families holidaying at home this year, and many choosing to delay their holidays, more people will take this opportunity to push through house sales and purchases.

House price inflation sped up again in May, with prices jumping by 10% over the last year.

The latest Land Registry figures show that the average UK house prices increased by 10.0% over the year to May 2021, up from 9.6% in April 2021, with London continuing to lag behind.

Average prices rose by 0.9% in May alone, lifting the average cost to £254,624, £23,000 higher than in May 2020.

That’s close to March’s record high of nearly £256,000, in the scramble to hit the original stamp duty deadline that month.

Average house prices increased over the year in England to £271,000 (9.7%), in Wales to £184,000 (13.3%), in Scotland to £171,000 (12.1%) and in Northern Ireland to £149,000 (6.0%).

The North West was the region with the highest annual house price growth, with average prices increasing by 15.2%.

London continues to be the region with the lowest annual growth (5.2%) for the sixth consecutive month.

The rise of home-working has pushed families to consider moving to more rural areas, with larger houses further from the office, while the stamp duty holiday created a surge of demand.

In March’s budget, Chancellor Rishi Sunak extended the stamp duty holiday on purchases up to £500,000 in England and Northern Ireland to the end of June. It then fell to £250,000 until the end of September.

Scotland’s stamp duty holiday ended on 31 March, while Wales finished at the end of June.

The price of detached houses surged by 11.3% over the year, while semi-detached properties rose 9.8%, terraces were 11.4% more expensive while flats and maisonettes rose 6.5%.

Nitesh Patel, strategic economist at Yorkshire Building Society, predicts growth will stay strong once the stamp duty holiday ends:

“The appetite for larger homes continues unabated with the price of detached homes growing by 11.3% compared to 6.5% for flats over the same period. Demand is strongest in areas of better affordability – namely the northern areas, where the average house price is significantly less than the UK average of £254,624. With the stamp duty holiday now reduced to the lower threshold of £250,000 until the end of September, we can still expect to see a healthy level of demand in these areas.

“Even once the tax break is removed in autumn, we do not anticipate activity and price growth to slow in response. Demand still exceeds supply, with fewer homes from existing stock coming up for sale and new builds still low, low borrowing costs and buyers still re-evaluating their housing needs should all support prices. And importantly households in aggregate have built up large stock of excess savings since the first lockdown, which could continue to fuel demand.”

Britain’s inflation rate has risen to 2.5% – its highest level in almost three years – after the easing of coronavirus lockdown restrictions prompted rising demand.

The Office for National Statistics (ONS) said dearer food, secondhand cars, clothing and footwear and fuel prices were the main factors behind a jump in the annual inflation rate from 2.1% to 2.5% in June.

The figure was the highest since the 2.7% recorded in August 2018, higher than the 2.2% expected by analysts and above the Bank of England’s 2% target.

Core inflation, which strips out food, energy, alcohol and tobacco, rose from 2% to 2.3%.

Threadneedle Street policymakers have said they expect rising inflation to be temporary and have signalled it will not trigger an early increase in interest rates from their record low of 0.1%.

According to the ONS, part of the increase in inflation as measured by the consumer prices index was caused by the bounceback in prices after they were depressed during lockdown....

Here’s the full story:

The inflationary pressures on UK manufacturers have eased slightly.

Inflation at the factory gate slowed in June, with output prices rising by 4.3% year-on-year, down from 4.4% in May, the Office for National Statistics reports.

On a monthly basis, output inflation was 0.4% in June, down from 0.8% in May.

Input cost inflation (what firms pay for raw materials and parts) also dipped, having surged as the easing of lockdown restrictions created high demand for commodities.

Input price inflation dropped to +9.1% year-on-year in June, down from May 2021.

The ONS transport equipment made the largest upward contribution to output inflation, while metals and non-metallic minerals pushed up input inflation.

Secondhand car prices jumped by 4.4% in June alone.

This is partly due to the shortages of semiconductors which has hit the car industry. With fewer new vehicles rolling off the production lines, people are turning to the used market instead.

The pandemic has also encouraged people to find alternatives to public transport, given the risk of catching Covid-19 in an enclosed space.

Jonathan Athow, the UK’s deputy national statistician, says June’s rise in inflation was ‘widespread’:

But, he also points out that the disruption caused by the pandemic is partly to blame. Clothes shops, for example, only reopened in mid-April, so the normal sales patterns are disrupted.

And the 20% annual jump in motor fuel prices also reflects the weak demand, and slump in oil prices, early in the pandemic.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Inflation across the UK has risen to its highest level in almost three years, as the cost of fuel, food, secondhand cars, clothing and footwear rose.

The Consumer Prices Index jumped to 2.5% in June, up from 2.1% in May, the highest inflation reading since August 2018, the Office for National Statistics reports.

This sharp move is higher than expected, taking inflation further over the Bank of England’s target of 2%, as the cost of living picks up as pandemic restrictions are lifted.

In June alone, the CPI rose by 0.5%.

The Office for National Statistics reports that transport costs pushed inflation up, with petrol prices much higher than in June 2020, when the UK was emerging from its first lockdown:

Motor fuel prices have jumped by over 20% over the last year, it says, the largest rate since May 2010.

Average petrol prices stood at 129.7 pence per litre in June 2021, compared with 106.5 pence per litre a year earlier. The June 2021 price is the highest recorded since October 2018.

In comparison, the UK was in the first national lockdown at this point last year and petrol prices were affected by reduced demand, reaching their lowest price in May 2020 for over four years

The ONS also adds that prices for food, secondhand cars, clothing and footwear, and eating and drinking out also rose in 2021 but mostly fell in 2020, pushing inflation up.

These were partially offset by a large downward contribution from games, toys and hobbies, where prices fell this year but rose a year ago.

As this chart shows, the causes of the increase in inflation in June were widespread:

This rise will intensify the debate about whether rising prices is transitory, as central bankers argue, or becoming stickier - meaning some of the stimulus measures brought in to support economies should be rolled back

It’s a wider issue too. Yesterday, the US consumer prices index jumped to a 13-year high of 5.4% year-on-year, higher than expected, partly due to a surge in used car prices.

More detail and reaction to follow...

The agenda

• 7am BST: UK inflation data for June
• 9.30am BST: UK house price index for May
• 10am BST: Eurozone industrial production
• 1.30pm BST: US producer prices index
• 3.30pm BST: US weekly oil inventories