September inflation in the UK climbed to a new 40-year high. Prices rose by 10.1 per cent year-on-year, 0.2 percentage points higher than in August. The London Stock Exchange reacted to the fresh inflation data by falling.
London Stock Exchange index loses
The main index of the London Stock Exchange, the FTSE 100, lost slightly during Wednesday’s trading. Immediately after the opening bell it fell by one percent, but in the afternoon it erased part of the losses. However, it failed to offset the initial decline.
Inflation had a big impact again
Worse-than-expected September inflation data were to blame. While the market was expecting as much as ten percent, the annual inflation rate exceeded this threshold by a tenth of a percentage point. Apart from energy, food and non-alcoholic beverages saw the biggest jump, rising by 14.5 per cent year-on-year.
The British pound also reacted to the unfavourable data, losing 0.2 per cent against the dollar and falling below $1.13 per British pound. The British central bank was thus under pressure because, on the one hand, it should raise interest rates in order to tame inflation, while on the other hand, an intensification of monetary restriction would lead to a weakening of economic growth.
