FRAS, NXT, MKS: Should you buy these retail stocks amid rising inflation?

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FRAS, NXT, MKS: Should you buy these retail stocks amid rising inflation?

 FRAS, NXT, MKS: Should you buy these retail stocks amid rising inflation?
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Highlights

  • UK factories are increasing prices at a record pace amid soaring inflation in the country.
  • Inflation in April hit 9%, up from 7% in March, driven largely by a 54% rise in the energy price cap at the start of the month.
  • Last month, output prices were 14% higher than a year ago in April, recording the highest rate since July 2008. Whereas input prices jumped by 18.6% over the last year.

UK factories are hiking prices at a record pace, amid soaring inflation in the country. The inflation rose to its highest rate in April in 40 years due to sharply rising energy and food bills, and the Ukraine war. 

According to the latest Office of National Statistics data, inflation in April hit 9%, up from 7% in March, driven largely by a 54% rise in the energy price cap at the start of the month. The inflation will further put pressure on the Bank of England to raise the interest rates.

Inflation in April hit 9%, up from 7% in March

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With the rising energy costs, UK households are also facing higher food costs as the geopolitical tension between Russia and Ukraine has spoiled the growing season in the breadbasket of Europe. The BoE has predicted that inflation could hit over a 10% high in October this year.

The figures will add further pressure on households that are already struggling to pay the escalating bills and will force them to switch to cheaper alternatives. The Retail Prices Index (RPI) rose to 11.1% in April from 9% in March.  

Resolution Foundation’s analysis shows that all households in the UK are affected by the tight squeeze on their incomes, whereas the lowest income households are suffering double-digit inflation (10.2%) as they spend more of their total budget on electricity and gas.

S&P Global said that selling prices rose at a record pace in April, with around 85% of businesses marking an increase in the purchase price, which will be passed to customers. Around 61% of companies have decided to raise their prices.

Last month, output prices were 14% higher than in April 2021, which is the highest rate since July 2008. Whereas input prices jumped by 18.6% over the last year.

Let us look at 3 FTSE-listed retail stocks that may get impacted due to rising inflationary pressure as they will feed through to customers in the shops.

Also Read: TSCO, PFD, HFG- Should you buy these stocks with rising food prices?

  1. Frasers Group Plc (LON: FRAS)
  2. Mcap: £3,332.91 million
  3. One-year return: 19.69%
  4. YTD return: -9.73%

Frasers Group Plc is an FTSE 250-listed retail and intellectual property group operating around 769 stores across 25 countries. In the last one year, its share prices rose by 19.69%, while its year-to-date return stood at -9.73%, as of 18 May 2022. Frasers Group Plc’s shares were trading at GBX 696.00, up by 1.09% at 8:30 AM (GMT), as of 18 May 2022.

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  1. Next Plc (LON: NXT)
  2. Mcap: £8,401.35 million
  3. One-year return: -20.07%
  4. YTD return: -20.98%

Next Plc is an FTSE 250-listed retail and intellectual property group operating around 769 stores across 25 countries. In the last one year, its share prices dipped by -20.07%, while its year-to-date return stood at -20.98%, as of 18 May 2022. Next Plc’s shares were trading at GBX 6,440.00, up by 0.44% at 8:30 AM (GMT), as of 18 May 2022.

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  1. Marks and Spencer Group Plc (LON: MKS)
  2. Mcap: £2,801.28 million
  3. One-year return: -7.91%
  4. YTD return: -37.88%

Marks and Spencer Group Plc is an FTSE 250-listed retail and intellectual property group operating around 769 stores across 25 countries. In the last one year, its share prices depreciated by -7.91%, while its year-to-date return stood at -37.88%, as of 18 May 2022. Marks and Spencer Group Plc’s shares were trading at GBX 143.75, up by 0.52% at 8:30 AM (GMT), as of 18 May 2022. 

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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