London stocks finished in a mixed state on Wednesday, after the latest UK inflation figures showed price increases taking a dip in September.
The FTSE 100 ended the session up 0.08% at 7,223.10, while the FTSE 250 was 0.38% weaker at 22,966.67.
Sterling was in the green, last trading up 0.14% on the dollar at $1.3817, while it strengthened 0.08% against the euro to change hands at €1.1866.
“Lately we have heard relatively hawkish updates from members of the Bank of England such as Andrew Bailey and Michael Saunders, so that has been the driving force behind the pound,” said Equiti Capital market analyst David Madden.
“The CPI data this morning acted as an excuse to book profit on the pound.”
Madden said the Bank of England’s inflation target was 2%, so the fractional dip in CPI to 3.1% still put it “way ahead” of its goal.
“Despite the CPI report, there is still a lot of speculation the bank will lift rates later this year.”
The latest figures from the Office for National Statistics earlier showed UK consumer price inflation unexpectedly dipping in September, despite the rising cost of fuel and transport.
It said the consumer price index (CPI) fell to 3.1% from 3.2% in August, against expectations for it to remain unchanged.
The figure was still well above the Bank of England’s target of 2%, meaning the data was unlikely to reduce expectations the central bank will raise interest rates before the end of the year.
According to the ONS, the decline was primarily due to the impact of last summer’s ‘Eat Out to Help Out’ scheme.
The biggest downward contribution came from restaurants and cafes, where price rises fell to 3.9% in September from 7.9% the month before.
Core inflation, which strips out volatile elements such as food and fuel, fell to 2.9% from 3.1%.
“Annual inflation fell back a little in September due to the unwinding effect of last year’s ‘Eat Out to Help Out,’ which was a factor in pushing up the rate in August,” said ONS head of prices Mike Hardie.
“However, this was partially offset by most other categories, including price rises for furniture and household goods and food prices falling more slowly than this time last year.
“The costs of goods produced by factories rose again, with metals and machinery showing a notable price rise.”
UK house prices, meanwhile, jumped in August, as buyers rushed to secure homes before the stamp duty holiday came to an end.
According to the ONS, UK average house prices rose 10.6% over the year to August, against an 8.5% rise in July.
Month-on-month, house prices rose 2.8% on a seasonally-adjusted basis, with the average house now costing £264,000, £25,000 higher than in August last year.
“While the threshold already had declined to £250,00 at the start of July, most intended purchases were largely unaffected, because the average house price is £264,000,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“Timelier data suggest that demand has weakened following the return of the threshold to £125,000, but remains above its pre-Covid level.
“Nonetheless, the adverse impact of the recent rise in markets’ expectations for bank rate has not emerged yet.”
Across the English Channel, eurozone inflation rose as expected in September, with consumer prices in the euro area increasing by 3.4%, compared to 3.0% in August.
As in the UK, that headline number was well above the European Central Bank’s 2% target, primarily due to a 17.6% jump in energy prices on the year.
The cost of food, alcohol and tobacco also contributed, up 2%.
“Eurozone inflation looks set to climb further in the coming months as higher input and energy costs feed through,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics.
“An unusually cold winter would put even more upward pressure on gas prices in the short term, but we still think that headline and core inflation will fall sharply next year to well below 2%.”
In equity markets, miners were under the cosh as metals prices fell, with Antofagasta down 0.95%, Rio Tinto losing 3.26%, BHP slipping 0.27%, Anglo American behind 0.05%, and Glencore 0.72% lower.
British Airways and Iberia owner IAG descended 4.87% after a downgrade to ‘hold’ from ‘buy’ at Peel Hunt.
The broker said the airline group’s yields were unlikely to rise quickly enough to offset fuel cost pressures.
Online review website Trustpilot tumbled 12.84% after shareholders placed around 41 million shares, or a 10% stake, in the company.
According to Bloomberg, holders Draper Esprit, Index Ventures, Northzone, Seed Capital, Sunley House Capital Management and Vitruvian Partners placed the shares.
Hammerson was in the red by 4.1%, even after the property group reported a “significant” improvement in rent collection for the fourth quarter.
Crest Nicholson reversed earlier gains to close down 0.05%, after the housebuilder outlined its growth strategy.
Going the other way, property group Shaftesbury advanced 1.26% after it said footfall and occupancy levels were continuing to recover.
FTSE 100 (UKX) 7,223.10 0.08%
FTSE 250 (MCX) 22,966.67 -0.38%
techMARK (TASX) 4,569.08 0.39%
FTSE 100 – Risers
Vodafone Group (VOD) 112.00p 2.38%
Burberry Group (BRBY) 1,872.50p 2.32%
SSE (SSE) 1,621.00p 2.08%
Auto Trader Group (AUTO) 607.20p 2.05%
Kingfisher (KGF) 336.60p 1.88%
BT Group (BT.A) 139.55p 1.86%
Smiths Group (SMIN) 1,447.00p 1.86%
Smurfit Kappa Group (CDI) (SKG) 3,687.00p 1.73%
St James’s Place (STJ) 1,542.00p 1.55%
Polymetal International (POLY) 1,391.00p 1.42%
FTSE 100 – Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 157.50p -4.87%
British Land Company (BLND) 485.20p -3.31%
Rio Tinto (RIO) 4,895.00p -3.26%
Land Securities Group (LAND) 678.20p -2.92%
Whitbread (WTB) 3,195.00p -2.89%
Melrose Industries (MRO) 160.70p -2.22%
Informa (INF) 525.80p -2.09%
SEGRO (SGRO) 1,271.00p -1.71%
JD Sports Fashion (JD.) 1,039.00p -1.42%
WPP (WPP) 980.40p -1.31%
FTSE 250 – Risers
Hochschild Mining (HOC) 149.80p 4.32%
Wood Group (John) (WG.) 236.60p 3.95%
Syncona Limited NPV (SYNC) 181.40p 3.07%
Centrica (CNA) 60.22p 2.94%
Airtel Africa (AAF) 98.50p 2.13%
Ninety One (N91) 265.00p 2.08%
Coats Group (COA) 68.30p 1.94%
Quilter (QLT) 148.20p 1.89%
Moonpig Group (MOON) 348.60p 1.87%
Energean (ENOG) 909.00p 1.85%
FTSE 250 – Fallers
Trustpilot Group (TRST) 330.00p -12.84%
TUI AG Reg Shs (DI) (TUI) 227.40p -6.69%
Draper Esprit (GROW) 960.00p -4.95%
Hammerson (HMSO) 32.01p -4.10%
SSP Group (SSPG) 242.00p -3.82%
Cineworld Group (CINE) 62.74p -3.61%
easyJet (EZJ) 591.20p -3.59%
Rank Group (RNK) 163.00p -3.55%
C&C Group (CDI) (CCR) 245.60p -3.38%
Clarkson (CKN) 3,760.00p -3.22%