London open: Stocks gain as inflation holds steady

(Sharecast News) - London stocks rose in early trade on Wednesday as data showed that UK inflation was steady in January, taking pressure off the Bank of England to keep rates higher for longer. At 0835 GMT, the FTSE 100 was up 0.5% at 7,547.57.

Figures released earlier by the Office for National Statistics showed the consumer price index rose 4% in the 12 months to January, unchanged on December. Analysts had been expecting a rise to 4.2%.

The ONS said food prices fell on the month for the first time in over two years. Furniture and household goods prices also decreased, though that was partly offset by higher gas and electricity charges and second-hand car prices, which went up for the first time since May.

On a monthly basis, CPI eased 0.6%.

Including owner occupiers' housing costs, inflation was 4.2%, also unchanged on December.

Core inflation, which strips out the more volatile elements of food, alcohol and energy, was steady at 5.1%.

"It's not unusual when inflation is falling to see these kind of pauses," Grant Fitzner, chief economist at the ONS, told the BBC.

The Bank of England hiked the cost of borrowing throughout 2022 and into 2023, as it looked to tackle surging inflation.

While inflation is now well below a peak of 11.1%, reached in October 2022, it remains above the BoE's long-term target of 2%.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Bank of England policymakers are a very wary lot and will want more evidence that inflation will hug the target of 2% rather than drift upwards again before they are confident about cutting rates. However, given this slightly better than expected reading, the prospect for rate cuts this year is more encouraging.

"The pound has dipped back by around 0.25%, reflecting this, and was trading around 1.255 against the dollar. The better-than-expected inflation reading has helped push the FTSE 100 into the green in early trade, with a sigh of relief palpable that cuts are on the horizon."

In equity markets, housebuilders rallied, with Persimmon and Taylor Wimpey among the best performers on the FTSE 100.

Coca-Cola HBC was the standout gainer on the top-flight index, however, after it posted record profits for last year driven by surging sales and volumes for sparkling drinks and coffee combined with costs easing in the second half.

United Utilities and Severn Trent also rose after trading updates.

On the downside, furniture and homewares retailer Dunelm fell even as it lifted its dividend and declared a special payout after a rise in interim profits and sales.

Market Movers

FTSE 100 (UKX) 7,547.57 0.47% FTSE 250 (MCX) 19,002.85 0.42% techMARK (TASX) 4,364.70 0.56%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,331.00p 5.67% Persimmon (PSN) 1,408.00p 3.42% Vodafone Group (VOD) 65.73p 2.46% Weir Group (WEIR) 1,832.00p 2.20% Taylor Wimpey (TW.) 144.50p 2.16% B&M European Value Retail S.A. (DI) (BME) 502.60p 2.05% Melrose Industries (MRO) 600.20p 1.90% GSK (GSK) 1,672.20p 1.85% Ocado Group (OCDO) 528.80p 1.77% BT Group (BT.A) 104.05p 1.71%

FTSE 100 - Fallers

Anglo American (AAL) 1,714.00p -2.39% Endeavour Mining (EDV) 1,271.00p -0.86% Glencore (GLEN) 389.45p -0.83% Antofagasta (ANTO) 1,649.00p -0.75% Fresnillo (FRES) 468.40p -0.72% Entain (ENT) 968.80p -0.51% Compass Group (CPG) 2,182.00p -0.14% Diageo (DGE) 2,857.00p -0.12% Beazley (BEZ) 576.50p -0.09% Halma (HLMA) 2,150.00p -0.05%

FTSE 250 - Risers

Target Healthcare Reit Ltd (THRL) 83.50p 5.70% Babcock International Group (BAB) 473.20p 3.95% Auction Technology Group (ATG) 580.00p 2.84% Hilton Food Group (HFG) 786.00p 2.21% PZ Cussons (PZC) 104.00p 2.16% Shaftesbury Capital (SHC) 131.10p 2.02% Mitie Group (MTO) 104.00p 1.96% Oxford Instruments (OXIG) 2,125.00p 1.92% Grafton Group Ut (CDI) (GFTU) 969.40p 1.86% Supermarket Income Reit (SUPR) 77.00p 1.85%

FTSE 250 - Fallers

W.A.G Payment Solutions (WPS) 80.40p -5.63% Ferrexpo (FXPO) 84.45p -2.93% Spirent Communications (SPT) 115.00p -2.46% Baltic Classifieds Group (BCG) 224.00p -2.40% Ibstock (IBST) 150.30p -2.34% Genus (GNS) 2,086.00p -1.60% RHI Magnesita N.V. (DI) (RHIM) 3,460.00p -1.48% Bodycote (BOY) 603.50p -1.15% Aston Martin Lagonda Global Holdings (AML) 172.30p -1.09% Paragon Banking Group (PAG) 629.00p -0.79%