Lower inflation rate upsets water companies

UK Water firms eye on next month inflation figure as the Retail Price Index (RPI) for November is the benchmark for water price next year.

Inflation rate for October falls to 5 per cent from previous month’s 5.2 per cent, which inspires costumers but hampers the mood of water companies.

According to Governor of the Bank of England, Sir Mervyn King, inflation rate will possibly dip to near one per cent in the coming year as economy stagnates.

Profits of water companies may be squeezed by a slowing inflation. Analysts at Bank of America Merrill Lynch reckon Severn Trent, one of the major water supplier, will report profits down one per cent to £156.5million while United Utilities, another water firm which covers a population of seven million people and 3.2 million households and businesses in North West England, will see its profits go down 5.8 per cent to £185million.

-Ziyi

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