Oil Price Sinks And Cost Of Living Crisis Sees Cash Withdrawals Surge As People Count Their Pennies

Published on
  • Oil price at lowest level in months at $96 per barrel
  • Next in discussions to buy 25% stake in struggling Joules
  • Rising prices cause huge spike in cash-spending

Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown

“Brent crude oil is now hovering at about $96 per barrel, after falling around 9% last week. Prices earlier today were as low as $94, which marks the lowest point in almost six months. The downward pressure on the oil price is coming solely from a weakening of demand expectations, as markets brace for a potentially sharp economic contraction. Gains triggered by the invasion of Ukraine have now been cancelled out, as rising interest rates and the subsequent cooling this is expected to have on global economies, outweigh previous questions about a lack of supply caused by the conflict.

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Rumours are swirling that high street giant Next has been in plans to snap up a 25% stake in fellow high street peer Joules. While no deal is inked or guaranteed, if the move is successful, it would mark the latest addition to NEXT plc (LON:NXT)’s growing portfolio of other high street names. Next is looking for ways to expand its core, especially online, as it looks to future-proof itself against the challenging outlook for bricks and mortar retailers. Joules has strong brand power and a recognisable style, which, on paper, makes it a reasonably sensible addition. At the same time, the higher price points of Joules’ clothing could make it more challenging to sell in the current inflationary environment.

New research by the Post Office has shown a 20% increase in in personal cash withdrawals compared to last year. The £801m handled is the highest since records began five years ago. The change is down to the cost-of-living crisis, as struggling consumers look to physically count the pennies to get by. This behaviour has very real connotations for the wider economy and shows that consumer resilience and confidence is heading the wrong way. Discretionary, non-essential items, from a pub drink to a summer holiday, are the expendables in this environment and such items are likely to feel the pinch in the coming months. Whatever the wider ramifications, there is certainly a clear indication that psychology is changing to counting money in real life and moving away from the tap-now-worry-later that comes with card culture.”

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