London pre-open: Stocks seen up as inflation falls more than expected

(Sharecast News) - London stocks were set to rise at the open on Wednesday following an upbeat session on Wall Street, as investors mulled a bigger-than-expected drop in UK inflation. The FTSE 100 was called to open around 30 points higher.

Figures released earlier by the Office for National Statistics showed that consumer price inflation fell to 7.9% in the year to June from 8.7% in May. This was the lowest reading since March 2022 and below analysts' expectations of 8.2%.

Meanwhile core inflation - which excludes energy, food, alcohol and tobacco - fell to 6.9% from 7.1%, versus expectations for it to remain unchanged.

Capital Economics said the falls in the CPI inflation rate and core inflation "are unlikely to be enough to prevent the Bank of England from raising interest rates in early August from 5.00%, although it may tilt the balance towards a 25bps hike rather than 50bps".

"Even so, we think there is enough momentum in wage growth and services inflation to raise our forecast for the peak in Bank Rate from 5.25% to 5.50%."

On the corporate front, National Grid has sold a further 20% of its UK National Gas transmission and metering business to the existing majority owners, a consortium of investors led by Macquarie Asset Management, along with an option to buy the rest of the company.

National Grid said it intended to use total proceeds of £700m towards general corporate purposes including repayment of debt.

The consortium has the option, exercisable between 1 May 2024 and 31 July 2024, to buy all or part of the remaining 20%.

Severn Trent said in an update that its financial performance is on track, and that it anticipated meeting current expectations, including a customer net reward of at least £50m.

The water utility said it had locked in 45% of its net energy exposure for the 2024-2025 period at lower rates, providing protection against price volatility. It added that it was efficiently managing its investment programme, with capital expenditure expected to be between £850m and £1bn this year in preparation for the AMP8 regulatory period.