The FTSE 100 index was down by 33 points, or 0.44%, at the end of Wednesday’s session. The index closed at 7,356.8 points, making its way to the lowest point in the last month. The FTSE 250 index followed a similar trend, concluding 78 points lower at 18,580.8.
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The numbers were mainly driven by the newly released data from the Office for National Statistics today, which indicates a notable deceleration in inflation to 6.8%. The decrease from 7.9% reported in the last month was attributed to reduced energy costs. Electricity prices witnessed a 15% decline in July, driven by the reduced quarterly energy price cap.
On the contrary, excluding food and energy prices, core inflation exhibited an unaltered annual growth rate of 6.9% in July, while service prices surged at a quicker pace. This sustains pressure on the Bank of England to uphold a stringent monetary policy to re-establish price stability.
In August, the BoE raised its interest rate by 0.25% to 5.25%, the highest in the last 15 years.
The BoE still feels they have much more to do to bring inflation rates back to their 2% target. BoE’s chancellor, Jeremy Hunt, commented, “The decisive action we’ve taken to tackle inflation is working… but we’re not at the finish line.”
Benefiting from favorable UK inflation data, the pound exhibited a strong performance. While sterling retreated from its peak, it successfully maintained a position above $1.2700 against the dollar.
On the company front, the insurance sector gained after Admiral Group PLC (GB:ADM) and Aviva PLC (GB:AV) posted higher profits in their half-yearly earnings for 2023. Admiral shares gained around 7% yesterday, taking the top spot in the FTSE 100. Aviva’s stock was up by over 1%.
Despite higher profits, Admiral reduced its interim dividend by 15% to 51p, down from 60p paid last year. On the other hand, Aviva raised its dividend by 8% to 11.1p.
Meanwhile, UK-based retailer JD Sports Fashion PLC (GB:JD) experienced a single-day increase of 2.84%, securing the second spot on the index.
Among the fallers, NatWest Group PLC (GB:NWG) was down by 3%, continuing its downward streak after its CEO, Alison Rose, resigned. The bank’s shares are down by over 7% in the last month over the Nigel Farage controversy.
