Relief could be on the horizon for Britain’s shoppers — and the supermarkets. Tesco said this morning it is seeing early signs of easing inflation, even as its sales in the UK rose 9% in the first quarter largely due to higher prices. Easing cost pressures would, of course, bring relief to consumers, and also be welcome for the country’s grocers who have fought stay competitive. The government, which has committed to halving inflation, even considered capping prices on essential goods, but that has reportedly been scrapped following a backlash from retailers.

Here’s the key business news from London this morning:

In The City

ITV Plc: The broadcaster said it is actively exploring a takeover of All3Media, the British TV producer that’s co-owned by Liberty Global Plc and Warner Bros Discovery Inc.

• All3Media could be valued at more than £1 billion ($1.3 billion) in a deal, Reuters reported on Thursday, citing people familiar with the matter

Tesco Plc: Sales at Britain’s largest grocer rose in the first quarter, as inflation pushed up prices for shoppers.

• The supermarket said there are some “encouraging early signs” that inflation is starting to ease, although it still doesn’t expect significant growth in retail adjusted operating profit this year

Peel Hunt Ltd.: The broker has seen a “gradual improvement” in its M&A pipeline since the start of the year, saying UK mid-cap valuations remain “attractive.”

• The company is also seeing “tentative” signs of a pick-up in capital markets activity

Away from the earnings

Does we need a digital version of the pound? A decision is still “some years” away, Bank of England Deputy Governor Jon Cunliffe told Politico’s Global Tech Day conference. The UK is “likely” to need a central bank digital currency, or CBDC, he said, placing the odds of the project going ahead at “seven out of 10.”

Rishi Sunak will let Members of Parliament deliver a final verdict on Boris Johnson’s scandal-ridden tenure at Number 10, in a bid to distance himself from the row. The House of Commons will vote Monday on whether to accept a parliamentary probe that found Johnson repeatedly misled politicians about the rule-breaking parties in Downing Street during the pandemic. Conservative MPs will not be instructed on how to vote.

In Case You Missed It

Legal & General Investment Management, the UK’s largest asset manager, wants Shell Plc to explain how it can still reach net zero emissions by 2050 while ratcheting up investments in fossil fuels. “There is a sense that oil and gas companies want to keep their options open in case the world misses the net zero by 2050 deadline,” said Stephen Beer, senior manager for sustainability and responsible investment at LGIM.

The comments follow Shell’s Wednesday announcement that it intends to devote an ever larger chunk of annual spending to oil and gas, a strategy that’s been dubbed “catastrophic” by climate activists.

On the M&A front, Mitchells & Butlers Plc may buy some pubs from hotel and restaurant group Whitbread Plc, the Times reported, without revealing how it got the information. About 250 of Whitbread’s 440 pub-restaurants are up for sale and the Premier Inn operator has also approached other companies such as Greene King, Heineken, Marston’s and Punch.

Looking Ahead

Next week’s highlight is the Bank of England’s rate decision due June 22 at 12 p.m. and another 25 basis points increase seems likely. That’s mostly because the central bank already signaled in May that it would stick to its monetary tightening policy while inflation proves stubborn.

“We expect a final hike in August, meaning a 5% terminal rate for this cycle,” Bloomberg Economics analysts Dan Hanson and Ana Andrade write, citing elevated risk of recession.Some economists, however, are not ruling out 50 basis points given the UK’s ongoing cost pressures.

There should be more clarity on the next BOE move once the Office for National Statistics publishes its latest inflation report on Wednesday. A consensus compiled by Bloomberg shows the consumer prices index at 8.5% in May from 8.7% a month earlier.

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