Tuesday lunchtime business bulletin

May 13 2008 By Andrew Mernin

High street baker Greggs reported slower sales growth today after poor weather and challenging economic conditions combined to hit footfall.

The firm said like-for-like sales grew by 4.7% during the 19 weeks to May 10, compared with a rise of 6.2% during the first 10 weeks.

Chairman Derek Netherton blamed this year’s earlier Easter and poor weather over the period for the dip during March and April.

He added: "There is also widespread evidence of reduced footfall on the high street as consumers react to the tightening economic climate."

Mr Netherton said sales had picked up since the beginning of May, but that it was too early to tell whether this would be sustained.

Shares in Newcastle-based Greggs, which operates a total of 1,376 Greggs and Bakers Oven shops, were down more than 3%.

A sharp jump in inflation that dampened hopes of an interest rate cut next month pushed the London market onto the back foot today.

Banks and retailers hoping for a consumer spending boost were the biggest losers after the CPI index rose 0.5% to 3% in April - its biggest monthly jump for nearly six years.

The announcement wiped out early gains for blue-chip shares and drove the FTSE 100 Index down 75.2 points to 6145.4 by mid-morning.

All the major banks were heavily in the red, with Alliance & Leicester the index’s worst casualty after a disappointing trading update. Its shares lost nearly 12%, or 61p to 449.5p, after it took a £192m from investments linked to the credit crunch and said mortgage balances deteriorated in the first four months of the year.

Mortgage lending for house purchases fell to its lowest level for more than three decades in the first three months of the year, figures revealed today.

The Council of Mortgage Lenders (CML) said the number of loans for house purchases plunged to 142,000 between January and the end of March - the lowest on record since the first quarter of 1975.

The data also showed lending to first-time buyers and home movers nearly halved year-on-year in March, to 46,500, down 1% since February and 48% on the 89,000 seen last March.

The figures add to the gloom in the housing market, with the Royal Institution of Chartered Surveyors (RICS) also today painting a grim picture for UK property, with news that surveyors are nearly unanimous in seeing price falls amid a transaction stalemate between buyers and sellers.

The pound at noon was US$1.9472 compared to US$1.9617 at the previous close while the euro at noon was £0.7943  compared to £0.7920 at the previous close.