(Sharecast News) - London stocks edged lower in early trade on Wednesday as a bigger-than-expected rise in UK inflation cemented rate hike expectations.
At 0835 BST, the FTSE 100 was down 0.2% at 10,714.03.
Figures from the Office for National Statistics showed that inflation soared to the highest annual rate in almost a year last month as transport costs soared. The consumer price index rose by 3.5% in the 12 months to September, up from 3.1% in August. It was also slightly above forecasts for 3.4%.
The largest upward contribution came from transport, particularly motor fuels, with prices in the segment jumping 6.6%, up from 4.6% a month earlier. The average price of petrol rose to 169.5p per litre, the highest since August 2022, while the cost of diesel was the steepest since July 2022.
Core CPI, which strips out more volatile energy, food, alcohol and tobacco prices, rose by 2.8%, up from 2.5% in August.
Grant Fitzner, chief economist at the ONS, said: "Other upward pressures included airfares and, to a lesser extent, computer games and live events, which are often volatile.
"These were partially offset by the cost of hotel stays, where prices rose by less than this time last year."
Martin Sartorius, lead economist at the Confederation of British Industry, said: "September's rise in inflation means that a rate hike will remain firmly on the table at the Monetary Policy Committee's next meeting. While there have been limited signs of higher energy costs feeding into domestic price pressures so far, the MPC will likely want to guard against the risk of persistently higher headline inflation becoming embedded in future wage and price-setting behaviour."
Other data released by the ONS showed an 8.3% hike in producer input prices in the year to September, up from a revised 6.7% gain in August and well ahead of forecasts for a 7.6% jump. Factory gate prices spiked 4.6%, the highest since April 2023, against August's 3.8% rise. A surge in the price of crude oil was the largest contributory factor.
There was also an update on public sector borrowing, which came in £24.5bn in September, up £1.8bn year-on-year, as government spending - including higher debt interest costs - increased by more than inflation. Borrowing in the financial year to September remained below the same period a year earlier, at £97.8bn, but ahead of the Office for Budget Responsibility's forecast.
In equity markets, Ithaca Energy, BP and Shell all gained after the UK government said it had approved plans to begin drilling in the Jackdaw gas field in the North Sea. Jackdaw is owned and operated by Adura, which is a joint venture between Shell and Equinor, Norway's state oil company.
Precious metals miner Fresnillo lost its shine as it posted a drop in third-quarter silver and gold production but maintained its full-year guidance, while Hochschild also fell after a production report.
Halfords tumbled even as the provider of motoring and cycling products backed its full-year profit expectations and hailed "strong" trading in the first half.
Market Movers
FTSE 100 (UKX) 10,714.03 -0.18%
FTSE 250 (MCX) 24,340.07 -0.10%
techMARK (TASX) 6,202.03 -0.09%
FTSE 100 - Risers
Ithaca Energy (ITH) 305.30p 4.13%
BP (BP.) 618.10p 2.18%
Computacenter (CCC) 5,045.00p 2.13%
Scottish Mortgage Inv Trust (SMT) 1,563.50p 1.72%
Shell (SHEL) 3,929.50p 0.82%
Lion Finance Group (BGEO) 12,420.00p 0.81%
Convatec Group (CTEC) 237.00p 0.76%
Admiral Group (ADM) 3,774.00p 0.75%
Bunzl (BNZL) 2,746.00p 0.73%
SEGRO (SGRO) 904.60p 0.62%
FTSE 100 - Fallers
3i Group (III) 2,309.00p -4.30%
Abrdn (ABDN) 227.60p -3.83%
Fresnillo (FRES) 2,632.00p -2.38%
JD Sports Fashion (JD.) 88.00p -2.17%
Kingfisher (KGF) 338.20p -2.02%
Barratt Redrow (BTRW) 315.70p -1.68%
International Consolidated Airlines Group SA (CDI) (IAG) 409.20p -1.57%
BT Group (BT.A) 204.50p -1.30%
ICG (ICG) 1,779.00p -1.17%
Unilever (ULVR) 4,845.00p -1.15%
FTSE 250 - Risers
Dr. Martens (DOCS) 70.70p 5.21%
Hays (HAS) 57.00p 3.93%
Entain (ENT) 451.20p 3.13%
Edinburgh Worldwide Inv Trust (EWI) 266.50p 2.90%
Rank Group (RNK) 78.70p 2.88%
Michael Page (PAGE) 194.60p 2.71%
Ceres Power Holdings (CWR) 287.40p 2.36%
Baltic Classifieds Group (BCG) 2.35p 2.26%
Baillie Gifford US Growth Trust (USA) 369.00p 2.22%
Raspberry PI Holdings (RPI) 584.25p 2.18%
FTSE 250 - Fallers
Halfords Group (HFD) 254.50p -8.45%
Ocado Group (OCDO) 335.80p -3.96%
Hochschild Mining (HOC) 493.60p -2.61%
Domino's Pizza Group (DOM) 231.60p -2.53%
B&M European Value Retail (BME) 270.60p -2.51%
Coats Group (COA) 81.90p -2.28%
WH Smith (SMWH) 417.40p -1.97%
Pan African Resources (PAF) 115.40p -1.95%
Clarkson (CKN) 5,120.00p -1.92%
Currys (CURY) 148.90p -1.85%
19.88 (0.19%)
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