US inflation jumped for the first time since June last year as American consumers faced higher housing costs.
The consumer prices index rose to 3.2pc in the year to July, up from 3pc the previous month.
The figure is lower than the 3.3pc predicted by economists and eases concerns about the potential for more interest rate rises as the US Federal Reserve tries to bring inflation back down to its 2pc target.
Importantly, the figure for core inflation, which strips out volatile food and energy prices, slowed to 4.7pc in July from 4.8pc in June after a drop in prices of used cars and trucks.
A series of interest rate rises have slowed the pace of American price rises from a four-decade high of 9.1pc in June last year.
The US Federal Reserve raised interest rates in July to between 5.25pc and 5.5pc.
Paul Ashworth, chief North America economist at Capital Economics, said: “Overall, there’s nothing here to suggest the Fed needs to push ahead with further interest rate hikes this year.”
Read the latest updates below.
02:20 PM BST
Pound rises after US inflation figures
The pound has gained as data from the US showed inflation rose in the way economists predicted.
The rise to 3.2pc in July was below the 3.3pc forecast and indicates the US Federal Reserve may not need to raise interest rates again at its next meeting in September.
It raises the chances that the Bank of England might be alone if it decides to raise interest rates at its next meeting.
The pound has risen 0.4pc against the dollar to head in the direction of $1.28.
Against the euro, the pound is down 0.1pc to €1.15.
02:14 PM BST
Oil price rises will not trigger more Fed rate hikes, say economists
The Federal Reserve will not find anything in the latest US inflation figures to indicate it needs to raise interest rates this year, experts have said.
Paul Ashworth, chief North America economist at Capital Economics, said that while housing costs had pushed inflation higher to 3.2pc, shelter costs “are a lagging indicator” and could “drop below the pre-pandemic average” over the next year.
He said that recent rises in the price of oil were also not a concern, adding:
Although energy prices increased by a muted 0.1pc month on month in July, the more recent surge in crude oil and gasoline prices will drive a much bigger gain in August.
Other that triggering a rebound in airline fares via higher jet fuel prices, we expect the knock-on impact on core prices to be pretty modest, however, particularly with food prices still rising at a more regular pace.
Overall, there’s nothing here to suggest the Fed needs to push ahead with further interest rate hikes this year.
02:05 PM BST
US jobless benefit claims rise
The number of Americans applying for jobless benefits jumped last week, but not enough to raise concern about the consistently strong US jobs market.
Applications for unemployment benefits rose by 21,000 – the most in five weeks – to 248,000 for the week ending August 5, from 227,000 the week before, the Labor Department reported.
The four-week moving average of claims, a less volatile reading, ticked up by 2,750 to 228,250.
Jobless claim applications are viewed as broadly representative of the number of layoffs in a given week.
Applications for jobless benefits reached a higher level above 260,000 for a few weeks this spring, causing some concern, but then retreated.
01:55 PM BST
Underlying inflation falls in US
While headline inflation increased, policymakers at the US Federal Reserve will have been relieved to read the latest data on underlying price rises.
The increase in core consumer prices index, which strips out volatile food and energy prices, slowed to 4.7pc in July from 4.8pc in June.
The figure fell after a second straight monthly drop in prices of used cars and trucks.
Although rental costs continued to climb last month, the pace has slowed from January, with a further moderation expected in the second half of this year through 2024.
01:51 PM BST
US inflation ‘will be stuck around 3pc’ this year
After the increase in US inflation, Wells Fargo senior economist Sam Bullard said:
Overall, the trend in inflation is more firmly on a downward path than at the start of the year.
While headline inflation has made quick work of getting back to low single digits, the year-over-year pace is likely to get stuck around 3pc through the end of the year.
This would keep a sustained return to the Fed’s target in the distance.
01:40 PM BST
Wall Street on track to open higher
US stock index futures extended gains after the milder-than-feared July inflation data fuelled hopes that the Federal Reserve is nearing the end of its aggressive rate hike cycle.
The consumer price index (CPI) for July increased by climbed 3.2pc in July, after rising 3pc in the previous month.
The Dow Jones Industrial Average is on target to open 0.7pc higher, the S&P 500 is up 0.9pc in premarket trading, and Nasdaq 100 futures gained 1.1pc.
01:34 PM BST
US inflation rises to 3.2pc
US inflation increased in the year to July to 3.2pc as prices were driven higher by more expensive gasoline.
However, core inflation, which strips out volatile food and energy prices, fell slightly to 4.7pc from 4.8pc in June.
01:24 PM BST
Harbour Energy to sell Vietnam oil fields for £66m
Britain’s biggest oil and gas producer has agreed an $84m (£65.8m) deal to sell its business in Vietnam.
Harbour Energy will offload its 53pc stake in the Chim Sao and Dua oil fields to Big Energy Joint Stock Company.
The Edinburgh-based company aims to complete the deal, which signals its exit from the country, by the end of the year.
Chief executive Linda Z Cook said:
We are pleased to have reached agreement to sell our business in Vietnam to Big Energy – a growing, local oil and gas player – as we continue to actively manage our portfolio.
While Vietnam does not form a core part of our growth strategy going forward, we are proud of the quality of the business we have built, both in terms of the organisation and assets, since our country entry in 2004.
01:05 PM BST
Wilko hit by ‘perfect storm’ of rising rates and prices
Wilko collapsed as the retail sector was hit by a “perfect storm” of rising prices and higher mortgage rates, according to analysts.
Tom Davey, director and co-founder at litigation finance broker Factor Risk Management, said many retailers “will find the conditions impossible to survive in their current guise” following the shock of the pandemic.
He expects more high profile companies to restructure and face fire sales, adding:
For companies such as Wilko, cheap capital has disappeared and this has led to a noticeable rise in both corporate and personal insolvencies over the past year. These figures are only likely to worsen.
The cost of managing inflation will be paid for by individuals and struggling corporates who have survived on cheap credit, and it speaks to the economic climate that has prevailed for the last 15 years that a return to historically more normal interest rates is having, and will continue to have, such a damaging effect on individuals and the high street in particular.
Finella Fogarty, a partner at law firm RPC, said that some Wilko stores face permanent closure even if administrators PwC find a buyer.
She added the company was “yet another casualty of the poor economic climate UK retailers find themselves in as a result of Brexit, Covid and geopolitics, which together have caused a perfect storm of rising interest rates, increased energy bills for retailers, supply chain issues and squeezed customer spending, resulting in an ongoing cost of living crisis”.
12:51 PM BST
Mortgage arrears rise among homeowners and landlords
A growing number of homeowners and landlords fell into arrears with their mortgage in the second quarter of 2023, according to figures from a trade association.
UK Finance, which released the figures, said home repossessions are expected to rise, given ongoing cost-of-living challenges.
There were 81,900 homeowner mortgages in arrears of 2.5pc or more of the outstanding balance in the second quarter of 2023, which was 7pc higher than in the previous quarter.
Within the total, 28,690 homeowners had arrears in the most severe band of more than 10% of the mortgage balance, which was up by 2pc compared with the previous quarter.
There were 8,980 buy-to-let mortgages in arrears of 2.5pc or more of the outstanding balance in the second quarter of 2023, 28pc higher than in the previous quarter.
Mortgages in arrears accounted for 0.93pc of homeowner mortgages outstanding and 0.44pc of buy-to-let mortgages outstanding in the second quarter of 2023, UK Finance said.
Some 610 homeowner mortgaged properties were repossessed in the second quarter of 2023, 19pc fewer than in the previous quarter.
And 440 buy-to-let mortgaged properties were repossessed in the second quarter of 2023, which was 7pc more than in the previous quarter.
12:20 PM BST
Disney to launch cheaper subscription service with ads in the UK
Disney will offer a cheaper version of its streaming subscriptions with advertising as competition in the sector heats up.
The Disney+ standard plan with adverts will become available in November following a successful launch in the US.
For £4.99 a month, customers will gain access to all of the service’s content like the Marvel and Star Wars franchises, although they will not be able to download it and only be able to use it across two devices.
Existing customers will remain on their current subscription, which will be renamed Disney+ Premium and have access to four devices.
However, monthly prices will increase from £7.99 a month to £10.99, with an option to switch down to a new standard plan or the standard with ads plan. Annual premium prices will rise from £79.90 to £109.90.
Existing customers who do not want to pay higher bills will need to switch before their next billing cycle starting on or after December 6.
11:54 AM BST
Wall Street awaits inflation figures
US stock markets have gained in premarket trading but that could all change once US inflation data is published an hour before the opening bell.
The consumer prices index for July is expected to show annual inflation climbed to 3.3pc, after rising 3pc in the previous month.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “Any bad surprise on the inflation front could revive the Federal Reserve hawks, but we are far from pricing another hike in September just yet.”
Traders are optimistic the Fed has completed its aggressive interest rate hike campaign, giving 86.5pc odds of no rate hike by the central bank in its September policy meeting, according to CME FedWatch Tool.
Initial jobless claims data is also published later in the day, along with remarks from Atlanta Fed President Raphael Bostic and Philadelphia President Patrick Harker.
The tech-heavy Nasdaq led Wall Street lower on Wednesday, with heavyweight Nvidia falling 4.7pc, followed closely by the other “Magnificent Seven” megacap stocks that drove this year’s stock rally.
Nasdaq has gained about 31pc this year amid hopes of a soft landing for the US economy in the face of the Fed’s aggressive interest rate rising cycle and optimism over the scope of artificial intelligence.
In premarket trading, the Dow Jones Industrial Average and S&P 500 were up 0.5pc, while the Nasdaq 100 had gained 0.6pc.
11:31 AM BST
Savills slumps as China’s property market falters
Savills shares have plunged to the bottom of the FTSE 250 after it warned that China’s property market will remain subdued for the rest of the year.
The international real estate adviser revealed that group revenues fell 2.5pc to a little over £1bn in the first half of the year amid rising interest rates.
Its shares have fallen 8.8pc after it said underlying profit before tax fell 72pc to £16.3m as warned its expectations for the rest of the year had “reduced somewhat”.
Chief executive Mark Ridley said:
We are seeing some positive signs in markets such as the UK and continued strength in certain Asia Pacific markets including Japan; in Continental Europe and mainland China we now expect reduced market volumes to continue through much of the year.
In many locations we are carrying very strong capital transaction pipelines awaiting the market conditions for launch.
In prolonged uncertain conditions, it remains challenging to predict accurately the timing of individual market recoveries.
Accordingly, our range of expectations for the year as a whole has reduced somewhat. We do, however, continue to anticipate a significant improvement in volumes of activity through the balance of the year, and into 2024.
11:11 AM BST
Wilko was ‘ultimate’ shop, say sad customers
Lots of sadness from shoppers after hearing about Wilko’s fall into administration:
10:58 AM BST
Wilko becomes high street’s biggest casualty since interest rate rises began
Wilko’s collapse is Britain’s biggest retail casualty since convenience store chain McColl’s in May last year.
McColl’s was subsequently bought by supermarket group Morrisons.
It also becomes the first major retail victim since Britain’s economy started being hit with 14 consecutive interest rate rises that began December 2021.
10:50 AM BST
Wilko faced tough competition from fellow discount chains
Wilko’s collapse comes as it faced steepening competition from rivals.
Senior business reporter Daniel Woolfson sets out some of the context to today’s announcement:
Wilko has been battling against fellow discounters Home Bargains, Poundland and B&M over recent years.
The chain was given a £40m loan from restructuring specialists Hilco UK – the owner of Homebase – in early 2023 to help it recover from supply chain disruptions and a sharp drop in footfall.
Chief executive Mark Jackson said the business had made “significant savings” and had improved its digital offer as it tried to turn its fortunes around over recent months.
However, this week it suspended home deliveries to customers as it scrambled to secure a rescue, listing the service as “temporarily unavailable” and instructing shoppers to order products using click-and-collect instead.
10:39 AM BST
‘It’s been an honour to have worked alongside you’
The boss of Wilko ended his open letter to the discount chain’s 12,000 staff saying that “time has run out” after they all “fought hard to keep this incredible business intact”. He said:
I’d like to take this opportunity on behalf of the directors and the Wilkinson family to thank all of our customers, suppliers, partners and our hardworking team members across our stores, logistics and support centre who remained loyal to wilko.
We’ve all fought hard to keep this incredible business intact but must concede that time has run out and now, we must do what’s best to preserve as many jobs as possible, for as long as is possible, by working with our appointed administrators.
It’s been an honour to have worked alongside you all as we fought to realise and to maximise the significant opportunities that existed to re-establish a profitable Wilko.
10:35 AM BST
Wilko boss insists turnaround plan attracted ‘significant’ interest
In his open letter to staff, Wilko chief executive Mark Jackson said the company’s turnaround plan had attracted “a significant level of interest” from potential buyers but it could not get a deal done in time to avoid administration. He said:
The turnaround plan included a new chair, bringing experience in retail turnaround situations and a newly refreshed and streamlined senior team.
Since January and with the help of retail advisers and experts, we’ve been facing into problems and have seen real progress against many areas of our plan.
Significant work has been completed to streamline costs and transform the way the business operates and our robust turnaround plan, based on annualised cost savings would have delivered the most profitable wilko ever recorded within 24-months.
While we can confirm we had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, without the surety of being able to complete the deal within the necessary time frame and given the cash position, we’ve been left with no choice but to take this unfortunate action.
10:29 AM BST
Wilko plunges into administration putting 12,000 jobs at risk
Wilko, the high street discount chain, has plunged into administration, putting 12,000 jobs at risk after it failed to secure a rescue deal.
The low-cost retailer, which is privately owned and has about 400 stores, has appointed PwC after potential buyers withdrew their interest in recent days.
In an open letter to staff, its chief executive Mark Jackson said: “While we can confirm we had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, without the surety of being able to complete the deal within the necessary time frame and given the cash position, we’ve been left with no choice but to take this unfortunate action.”
The company, which sells everything from stationery to hardware, warned it was at risk of insolvency on August 3 amid “mounting cash pressures”, and filed a notice of intention to appoint administrators. This gave it 10 working days to find a buyer for or all or part of the business, with a deadline of Aug 17.
Mr Jackson added: “We’ve all fought hard to keep this incredible business intact but must concede that time has run out and now, we must do what’s best to preserve as many jobs as possible, for as long as is possible, by working with our appointed administrators.”
The investment firm Gordon Brothers – the owner of Laura Ashley – is one party understood to have held talks with Wilko’s advisers about a potential rescue deal to salvage the business.
Wilko was founded in Leicester in 1930 by James Kemsey Wilkinson and his fiancée.
It was renamed Wilko in 2014 when Karin Swann, part of the third generation of the family to run the business, sold her stake to her cousin Lisa Wilkinson and her side of the family, which included Tony Wilkinson, the son of founder James.
10:16 AM BST
Virgin Galactic to carry first space tourists
Virgin Galactic is poised to launch its first private space tourists today in a long-awaited milestone for Sir Richard Branson’s quest to build a “spaceline for Earth.”
The suborbital trip will launch from a New Mexico spaceport, capping nearly two decades of development work.
The company’s second commercial spaceflight allows it to finally begin clearing a backlog of roughly 800 ticket holders who have been waiting for rides to space.
Virgin Galactic is competing against Jeff Bezos’ Blue Origin to sell trips to thrill-seekers looking to shed Earth’s gravity for a few minutes, the driving reason the company was first created.
The passengers include 80-year-old Jon Goodwin, a British former Olympian who has Parkinson’s Disease, as well as Keisha Schahaff and Anastatia Mayers, a mother-daughter pair from the Caribbean who won their seats through a charity prize draw.
They will be joined by two pilots and a Virgin Galactic support astronaut.
Virgin Galactic’s shares fell 2.3pc to $3.38 on Wednesday in regular trading in New York.
10:03 AM BST
Wilko home deliveries suspended
Wilko’s downfall comes a day after it emerged it had suspended home deliveries as it scrambled for a rescue deal.
The discount retailer’s website said that its delivery service is “temporarily unavailable”, instructing online shoppers to instead order products using click-and-collect.
09:49 AM BST
Wilko poised to announce collapse
Wilko is poised to tell thousands of staff this morning that the discount chain has collapsed.
The low-cost retailer, which is privately owned and has about 400 stores, is due to enter insolvency proceedings as soon as today unless an unexpected last-minute buyer emerges, according to Bloomberg.
Wilko previously appointed advisers at PwC to find new funding but potential buyers withdrew their interest in recent days. It has roughly 12,000 staff.
The company, which sells everything from stationery to hardware, warned it was at risk of insolvency on August 3 amid “mounting cash pressures”.
Chief executive Mark Jackson said at the time that Wilko lacked an offer that “provides the necessary liquidity”.
It secured a £40m lifeline from Hilco UK — the owner of Homebase — at the beginning of this year after it reported supply chain disruptions and a sharp drop in footfall.
A spokesperson for Wilko declined to comment.
09:24 AM BST
Pound gains ahead of US inflation data
The pound has gained against the dollar ahead of the key US inflation report due later.
Sterling was up 0.4pc and headed back in the direction of $1.28, even as data from the Royal Institution of Chartered Surveyors (Rics) showed Britain’s housing market is in its worst state since the financial crisis.
The pound has slipped 0.1pc against the euro, which is worth 86p.
08:56 AM BST
FTSE 100 held back by ex-dividend stocks
UK stocks inched higher at the open ahead of the big US inflation report later today.
However, British indexes lagged a broader rally in Europe after heavyweights including HSBC and Rio Tinto traded without the entitlement of dividends.
The FTSE 100 index gained 0.1pc, while the broader European STOXX 600 index rose 0.7pc.
The blue-chip British stocks gauge was still on track to extend gains after its biggest daily gain in three weeks on Wednesday.
Banks stocks — Barclays, NatWest, HSBC and Standard Chartered — were down between 0.3pc and 1.1pc as they traded ex-dividend.
Miner stocks fell 0.4pc, with the heaviest drop coming from Rio Tinto, which was down 2.7pc.
Spirax-Sarco shares fell 5pc after the firm reported first-half profit and revenue below expectations.
A much-awaited US inflation report later will help investors gauge the trajectory of the Federal Reserve’s policy path.
FTSE 250 stocks edged higher by 0.3pc.
08:38 AM BST
Persimmon axes jobs as home sales slump
Persimmon has cut hundreds of jobs after reporting after revealing its pre-tax profits more than halved as stubbornly high mortgage rates grip the property market.
The housebuilder said it reduced headcount by almost 300 in the first half of the year and further reviews are ongoing to cut costs by as much as £25m annually.
The FTSE 100 company’s shares have gained 1.9pc after it said is also planning to remove certain specifications in homes that are less important to customers, resulting in savings of up to £1,800 per plot.
UK households are facing an avalanche of cost pressures triggered by surging mortgages rates and the impact of high inflation.
Several of Britain’s biggest developers have reported downbeat results, with Bellway also warning of job cuts this week in the face of weak demand for new homes.
Persimmon’s home sales dropped to 4,249 in the six months to June, compared with 6,652 in the first half of 2022.
Chief executive Dean Finch said: Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate. We are on track to deliver profit expectations for the year.”
08:17 AM BST
Gas prices fall back after surge triggered by threat of Australian strikes
European natural gas have pulled back after the huge surge triggered by a vote supporting strikes by workers in Australian facilities.
Benchmark futures have fallen 4.1pc today after surging 28pc on Wednesday, which was the biggest such move since the early weeks of the Ukraine war in March 2022. Prices gained 49pc at one point.
Potential strikes at three major liquefied natural gas facilities in Australia could disrupt about 10pc of global exports of the fuel.
If industrial action goes ahead, it could make Asian buyers seek alternative supplies from outside the region, intensifying competition with Europe for the fuel.
Zongqiang Luo, senior analyst at Rystad Energy, said:
Any such strike could disrupt about half of Australia’s LNG export capacity and cause many Asian buyers to look elsewhere for their cargoes.
This price surge reflects the likelihood of the strike materialising, impacting LNG supplies during the ongoing heat waves, despite the ample gas inventories in Europe.
Dutch front-month futures, Europe’s gas benchmark, slipped below €39 a megawatt-hour in early trading.
08:06 AM BST
UK markets edge upwards
It has been a tepid start for stock markets in London following the US ban investments into Chinese technologies.
The internationally-focused FTSE 100 has risen 0.1pc to 7,592.93 while the FTSE 250 has gained 0.2pc to 18,977.90.
07:51 AM BST
Deliveroo orders shrink amid cost-of-living crisis
Food delivery firm Deliveroo has increased its full-year earnings expectations despite seeing order numbers shrink further as consumers continue to face cost-of-living pressures.
The multinational business saw order numbers fall by 6pc over the latest half year, but food price inflation boosted gross transaction value (GTV) per order, which jumped by a tenth to £24.20 from £22.10.
Deliveroo said: “Starting last year, high food price inflation in many markets has put pressure on consumer spending power and impacted demand for food delivery.”
The food delivery giant said it expects its full-year adjusted earnings to be up to £80m and revealed it plans to dish out an extra £250m to shareholders.
07:45 AM BST
Entain puts aside £585m for potential bribery penalty
Coral and Ladbrokes owner Entain has set aside £585m in case it is fined over an HMRC investigation into potential bribery at its former Turkish business.
Entain said it has taken the provision as it continues negotiations with the Crown Prosecution Service following the four-year inquiry.
The company had previously flagged that it might face a “substantial financial penalty” because of conduct at its former subsidiary in Turkey.
Authorities started investigating the firm’s suppliers in 2019, and a year later started to look at the GVC Group, which subsequently rebranded as Entain.
Entain sold the Turkish subsidiary in 2017, before the investigation started.
Chairman Barry Gibson said: “We are pleased to be making good progress towards drawing a line under this historical issue, which relates to a business that was sold by a former management team of the group nearly six years ago.
“We have been working closely with the CPS throughout this process, and they have recognised our extensive co-operation.
“Following a complete overhaul of our business model, strategy and culture in the last few years, the Entain of today bears no resemblance to the GVC of yesterday.”
07:33 AM BST
Biden’s ban on US investment in Chinese tech sparks slump in Asian shares
Joe Biden has announced a ban on US investments into sensitive high-tech areas in China in a move branded as “anti-globalisation” by Beijing.
The President signed an executive order on Wednesday blocking and regulating any US financial backing for advanced computer chips, quantum computing and artificial intelligence in the world’s second largest economy.
The long-anticipated rules are expected to be implemented next year.
Rishi Sunak is understood to be considering a similar ban, after promising Mr Biden during a visit to the White House in June that Britain would “respond effectively” to the risk that British capital and expertise could help rival countries develop a military or intelligence threat.
The Prime Minister’s spokesman said: “The UK will consider these new measures closely as we continue to assess potential national security risks attached to some investments.”
Mr Biden said in a letter to Congressional leaders: “The commitment of the United States to open investment is a cornerstone of our economic policy and provides the United States with substantial benefits.
“However, certain United States investments may accelerate and increase the success of the development of sensitive technologies and products in countries that develop them to counter United States and allied capabilities.”
The Chinese Ministry of Commerce responded in a statement early Thursday that it has “serious concern” about the order and “reserves the right to take measures.”
Asian shares responded with falls overnight, with stocks in Hong Kong down 1pc and the Shanghai Composite down 0.2pc.
07:25 AM BST
President Joe Biden signed an executive order Wednesday to block and regulate high-tech US investments going toward China, reflecting an intensifying competition between the world’s two biggest powers.
The order covers advanced computer chips, micro electronics, quantum information technologies and artificial intelligence.
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What happened overnight
Asian stocks broadly fell, hovering close to a one-month low, after Joe Biden announced a US ban on investments in sensitive technologies in China.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6pc and looked set to log a second straight week of losses with markets still reeling from the world’s second largest economy slipping into deflation.
China’s blue-chip CSI 300 Index fell 0.5pc and the Shanghai Composite Index eased 0.2pc, while Hong Kong’s Hang Seng Index retreated nearly 1pc.
Wall Street stocks slipped on Wednesday, as traders braced for the highly anticipated report on US inflation released later today.
The S&P 500 fell 0.7pc to 4,467.71 for its sixth drop in the last seven trading sessions.
The Dow Jones Industrial Average dropped 0.5pc to 35,123.36, while the tech-rich Nasdaq Composite sank 1.2pc to 13,722.02.
In the bond market, the yield on the benchmark 10-year Treasury slipped to 4.00pc from 4.03pc late Tuesday. The two-year Treasury yield, which moves more on expectations for action by the Fed, rose to 4.80pc from 4.76pc.
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