Business

Will We See Deflation in 2023?

Deflation in 2023, 2022 was undoubtedly the year of inflation, especially in developed economies such as the US and UK. In the UK, for example, inflation reached double figures in Q3 last year and peaked at 11.1% in October, while it remained slightly above 10% in January 2023.

The good news is that we’ve seen three consecutive months of falling inflation since November last year, while better-than-expected data releases have also improved economic sentiment on these shores.

But will 2023 see inflation continue to tumble? And will 2024 see widespread deflation? Let’s find out!

Inflation vs Deflation – What Do They Mean?

Let’s start with the key question; what is deflation?

Well, as the names suggest, this is the polar opposite of inflation, which describes a scenario where prices rise in an economy within a predetermined period of time.

Conversely, deflation describes a sustained fall in the overall price of goods and services in an economy, and a subsequent increase in the purchasing power of a national currency.

This shouldn’t be confused with inflation falling, however. After all, deflation can happen even when prices are rising, so long as the rate at which they’re increasing continues to slow.

This is a key distinction, and one that can help us to understand precisely how the economic climate will fare through 2023 and 2024.

A Look at the UK’s Macroeconomic Climate

The UK economy has fared surprisingly well in recent times, avoiding a technical recession in the final quarter of 2022 and poised to see similarly nominal growth in Q1 of this year.

At the same time, February saw the S&P Global and the Chartered Institute of Procurement and Supply’s composite flash purchasing managers’ (PMI) hit 53 points, with this key economic metric up significantly from 48.5 points last month.

Most crucially, this recording breaks the 50-point threshold that separates growth and contraction in an economy, with this representing the first time in six months that the metric has been indicative of growth rather than contraction.

This is good news for the private sector, GDP growth and the wider economy as a whole, as is the fact the inflation has fallen by a single percentage point since the peak of 11.1% in October.

This has come as wholesale energy prices have fallen at a faster-than-expected pace, and if this trend continues, inflation will continue to fall at a noticeable rate through 2023.

The Last Word – When will Deflation Set in?

At first glance, inflationary recessions are rare events, with sustained economic contractions synonymous with falling prices and consumer demand.

However, the key trigger for inflation in this instance has been the war in Ukraine, which initially sent wholesale energy prices soaring and caused the price of food staples such as wheat to increase as scarcity set in (Ukraine and Russia account for 30% of global wheat trades combined).

The good news is that there have been no more price shocks since then, which is why prices have begun to fall steadily over the course of the last three months or so in the UK and through other developed economies.

There’s certainly no reason for prices to keep growing in the current macroeconomic climate, meaning that inflation will gradually fall at a steady rate throughout the next 10 months.

As we’ve already touched on, these figures aren’t yet indicative of deflation, particularly as the purchasing power of the pound and similar currencies continue to be undermined.

Make no mistake; the actual process of deflation may not start in earnest until the end of this year, as purchasing power returns and some semblance of normality is restored to the economy.

This should then continue through 2024, as inflation is dragged back towards the BoE’s target of 2% and prices return to a more proportionate level to earnings.

Interestingly, deflation is often associated with economic contraction, so this process may not signal wider economic growth or that the UK is out of the woods in relation to avoiding a recession.

This will be an interesting space to watch in the future, particularly with the UK’s GDP expected to contract by 0.6% on the whole this year and unlikely to grow markedly next year either.

Business

PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

Business

Old National Bank And Infosys Broaden Their Strategic Partnership.

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

Business

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP