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Highlights
- Ben Broadbent, the deputy governor at the Bank of England (BoE), cautioned that inflation could rise to over 5 per cent by spring 2022 due to soaring gas and electricity bills.
- The rise could potentially come as the energy regulator Ofgem’s is expected to hike its price cap on gas and electricity bills in April next year.
- UK’s October inflation rate was at 4.2 per cent, while its MPC target is 2 per cent.
Ben Broadbent, the deputy governor at the Bank of England (BoE), cautioned that inflation could rise to over 5 per cent by spring 2022 due to soaring gas and electricity bills.
Broadbent in his speech at Leeds University Business School, said that inflation could comfortably rise through 5 per cent, much higher than its MPC target of 2 per cent, as the energy regulator Ofgem’s is likely to hike its price cap on gas and electricity bills in April next year.
The country’s inflation rate in October was at 4.2 per cent, rising to its highest in a decade due to rising fuel prices and soaring household energy costs. Comparatively, the BoE’s Monetary Policy Committee (MPC) has a target of 2 per cent.
In view of this, let us take a look at 2 FTSE listed gas and electricity utility stocks and explore the investment prospects in them:
- National Grid PLC (LON: NG.)
National Grid is a UK based multinational electricity and gas utility firm.
National Grid’s recently acquired electricity distribution business in the UK, namely Western Power Distribution (WPD), is all set to submit its business plans to the energy regulator, Ofgem for the 2023-2028 RIIO-ED2 period.
According to the WPD plans, WPD has a baseline total expenditure (totex) spend of £6.7 billion between 2023 and 2028.
Image source: EODHD/Others
National Grid’s shares were trading lower by 0.39 per cent at GBX 1,020.80 on 7 December at 09:23 BST, while the FTSE 100 index was at 7,315.19, up by 1.15 per cent. (The company is a constituent of the FTSE 100 index)
The company’s market cap was at £37,067.99 million, and it had a one-year return as of 19.60 per cent as of Tuesday.
- ContourGlobal plc (LON: GLO)
ContourGlobal is a power generation business.
The company upgraded its guidance for FY 2021 due to current trading and better-than-expected performance of its natural gas-fired power plant based in Arrubal, Spain.
The firm now expects its FY 2021 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to be between US$ 810 and US$ 840 million, higher by about US$ 30 million from its previous guidance.
In October, the group had stated it expects its FY 2021 adjusted EBITDA to be between US$ 780 and US$ 810 million.
Image source: EODHD/Others
ContourGlobal’s shares were trading higher by 1.27 per cent at GBX 191.00 on 7 December at 09:46 BST, while the FTSE 250 index was at 7,315.19, up by 1.15 per cent. (The company is a constituent of the FTSE 250 index)
The company’s market cap was at £1,237.48 million as of 19.60 per cent as of Tuesday.
