London open: Stocks little changed as inflation hits 10.1%

(Sharecast News) - London stocks were little changed in early trade on Wednesday as investors mulled the latest UK inflation data. At 0825 BST, the FTSE 100 was up just 0.1% at 7,542.97, while sterling was 0.1% lower against the dollar at 1.2090.

Figures released earlier by the Office for National Statistics showed that inflation hit a fresh 40-year high in July and surpassed analysts' expectations as food and energy prices jumped.

Consumer price inflation rose to 10.1% from 9.4% in June. This marked the highest rate since February 1982 and was above analysts' expectations of 9.8%. Core inflation, which strips out food and energy costs, increased to 6.2% from 5.8% a month earlier, coming in above forecasts of 5.9%.

Food inflation rose in July to 12.6% - its highest rate since August 2008 - from 9.8%.

ONS chief economist Grant Fitzner said: "A wide range of price rises drove inflation up again this month. Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices.

"Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July.

"Driven by higher demand, the price for package holidays rose, after falling at the same time last year while air fares also increased.

"The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively."

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: '"The relentless rise upwards in prices continues, with little sign of a break for consumers who are desperately trying to make ends meet. Inflation has now hit double digits, a painful financial milestone but the worst is yet to come.

"Right now the Bank of England finds itself in a sticky situation, with little option but to keep raising interest rates to try and lower demand in the economy. Policymakers are in a jam because they know full well that this monetary policy squeeze risks pushing the UK economy into recession, if it isn't there already. This boiling temperature will mean policymakers won't easily be able to turn down the heat on those rate rises given their stated determination to put a lid on inflation and bring it back to its 2% target."

In equity markets, banks were among the top performers, with Barclays, Lloyds and NatWest all trading up amid the prospect of more Bank of England rate hikes.

Construction firm Balfour Beatty gained as it upgraded full-year guidance after interim profits more than doubled and new orders rose 10%.

On the downside, Ladbrokes owner Entain slumped after it was fined £17m by the Gambling Commission for social responsibility and anti-money laundering failures.

Housebuilder Persimmon ticked lower as it posted a fall in interim profits, but reiterated completion guidance and said price rises were offsetting cost inflation.

Cineworld tumbled after saying it was mulling a restructure of its finances as a lack of blockbuster films from Hollywood had hit ticket sales.

Market Movers

FTSE 100 (UKX) 7,542.97 0.09% FTSE 250 (MCX) 20,376.07 0.20% techMARK (TASX) 4,386.98 -0.12%

FTSE 100 - Risers

Barclays (BARC) 173.20p 1.58% Legal & General Group (LGEN) 287.50p 1.27% Kingfisher (KGF) 258.20p 1.18% 3i Group (III) 1,267.50p 1.12% Lloyds Banking Group (LLOY) 46.20p 1.04% Coca-Cola HBC AG (CDI) (CCH) 2,057.00p 0.93% B&M European Value Retail S.A. (DI) (BME) 436.20p 0.93% NATWEST GROUP PLC ORD 100P (NWG) 263.30p 0.88% British American Tobacco (BATS) 3,436.00p 0.87% Ashtead Group (AHT) 4,649.00p 0.85%

FTSE 100 - Fallers

Entain (ENT) 1,354.50p -3.70% Rio Tinto (RIO) 4,870.00p -0.98% Antofagasta (ANTO) 1,154.00p -0.90% AstraZeneca (AZN) 10,886.00p -0.75% GSK (GSK) 1,414.40p -0.74% International Consolidated Airlines Group SA (CDI) (IAG) 122.12p -0.72% BAE Systems (BA.) 794.00p -0.68% Persimmon (PSN) 1,837.50p -0.62% Compass Group (CPG) 1,947.50p -0.46% Anglo American (AAL) 2,990.00p -0.42%

FTSE 250 - Risers

Balfour Beatty (BBY) 309.20p 6.92% IP Group (IPO) 84.25p 6.71% Carnival (CCL) 821.80p 5.39% Chrysalis Investments Limited NPV (CHRY) 97.90p 4.59% Darktrace (DARK) 534.20p 3.69% Dr. Martens (DOCS) 269.80p 2.51% Ferrexpo (FXPO) 147.30p 2.43% HGCapital Trust (HGT) 407.00p 2.26% Auction Technology Group (ATG) 943.00p 1.84% Dunelm Group (DNLM) 865.00p 1.76%

FTSE 250 - Fallers

Hochschild Mining (HOC) 77.00p -5.29% Bridgepoint Group (Reg S) (BPT) 260.80p -4.68% ASOS (ASC) 924.50p -3.65% Essentra (ESNT) 251.50p -1.18% TUI AG Reg Shs (DI) (TUI) 153.40p -0.87% Quilter (QLT) 114.40p -0.82% Marshalls (MSLH) 465.00p -0.81% Murray International Trust (MYI) 1,268.00p -0.78% Wetherspoon (J.D.) (JDW) 576.50p -0.77% Johnson Matthey (JMAT) 2,263.00p -0.75%