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London pre-open: Stocks to fall as inflation hits 41-year high
(Sharecast News) - London stocks were set to fall at the open on Wednesday amid geopolitical concerns, as investors mulled the latest grim UK inflation figures. The FTSE 100 was called to open 33 points lower at 7,336.
CMC Markets analyst Michael Hewson noted reports that two Russian missiles had landed in Poland, killing two people in the process.
"Russia has denied the allegations; however, the incident has raised the temperature given Poland is a member of NATO, and a deliberate attack could prompt a counter-response from other NATO members under article 5 on mutual defence," he said.
"As a result of this elevated uncertainty, and the ongoing investigation as to who might be responsible, European markets look set to open lower this morning."
On home shores, data released earlier by the Office for National Statistics showed that consumer price inflation hit a 41-year high of 11.1% in the year to October as energy bills and food prices surged. This was up from 10.1% in September and above expectations of 10.7%.
Grant Fitzner, chief economist at the ONS, said: "Rising gas and electricity prices drove headline inflation to its highest level for over 40 years, despite the Energy Price Guarantee.
"Over the past year, gas prices have climbed nearly 130% while electricity has risen by around 66%.
"Increases across a range of food items also pushed up inflation.
"These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.
"There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices."
In corporate news, energy provider SSE swung to an interim loss in what it called "unprecedented market volatility".
The company posted a pre-tax loss of £511m loss compared with a profit of £1.6bn last year. Profitability in renewables was negatively affected by the pace of project delivery and unfavourable weather, exacerbated by the associated requirement to buy back hedges in a higher-price environment.
Mr Kipling owner Premier Foods backed its full-year expectations as it posted a rise in first-half profit and revenue despite a challenging backdrop.
In the 26 weeks to 1 October, adjusted pre-tax profit increased 11.9% to £47m on revenue of £418.6m, up 6.2% on the same period a year earlier.
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