London’s FTSE 100 dips after weaker than expected UK inflation

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The capital’s premier index tumbled 1.47 per cent to 7,277.30 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, slid 1.66 per cent to below the 19,000 point mark (Photo by Christopher Furlong/Getty Images)

London’s FTSE 100 dripped lower today after fresh figures revealed UK inflation is cooling.

The capital’s premier index tumbled 1.47 per cent to 7,277.30 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, slid 1.66 per cent to below the 19,000 point mark.

Traders were seemingly unmoved by numbers released by the Office for National Statistics (ONS) showing the rate of price increases in Britain curbed to 9.9 per cent in August, down from a 40-year high of 10.1 per cent in July and below analysts’ expectations.

The figures did little to drag the City’s attention away from the Bank of England campaign against price rises.

Investors are pricing in interest rates to peak to more than four per cent by next May. Most think governor Andrew Bailey and co will lift borrowing costs 50 basis points next Thursday, the second such move in a row.

“Inflation is still uncomfortably high with food and clothing becoming more expensive again and core inflation, stripping out volatile food and energy prices, stubbornly set at a 30 year high of 6.3 per cent,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

Focus on central banks tightening cycles drove the worst day on Wall Street yesterday since June 2020. 

A hotter than expected US inflation print ramped up bets on the Federal Reserve lifting rates by at least 75 basis points next week, dragging the S&P 500, Nasdaq and Dow Jones indexes sharply lower.

London’s FTSE 100 was dragged lower by online supermarket and middle-class favourite Ocado tumbling over eight per cent.

The firm’s shares shed over 14 per cent yesterday after it said shoppers are trading down to cheaper supermarkets.

London’s FTSE 100 has been dragged down by Ocado

London's FTSE 100
Ocado’s shares have dropped over 55 per cent so far this year

FTSE 250-listed airlines led the index lower, with Wizz Air down 5.99 per cent.

The pound snapped back against the US dollar after suffering heavy losses yesterday. Sterling strengthened around 0.6 per cent against the greenback.

Oil prices edged higher.