London open: FTSE nudges lower as inflation rises more than expected
By Michele Maatouk
Date: Wednesday 20 Aug 2025
(Sharecast News) - London stocks nudged lower in early trade on Wednesday after figures showed that UK inflation rose more than expected in July.
At 0825 BST, the FTSE 100 was down 0.1% at 9,180.01.
Data released earlier by the Office for National Statistics showed that consumer price inflation rose at an annual rate of 3.8%, mainly due to transport and in particular air fares. This was up from 3.6% in June and above analysts' expectations of 3.7%.
Prices in the transport division rose 3.2% in July, up from 1.7% the month before. This reflected a large upward effect from airfares, which jumped 30.2% between June and July, compared with a rise of 13.3% between the same months in 2024.
Food and non-alcoholic beverages prices increased 4.9% in July, up from 4.5% the month before. This was the fourth consecutive rise in the annual rate and the highest recorded since February 2024, but remains well below the peak seen in early 2023.
The core rate - which strips out energy, food, alcohol and tobacco - rose to 3.8% from 3.7%.
ONS chief economist Grant Fitzner said: "The main driver was a hefty increase in air fares, the largest July rise since collection of air fares changed from quarterly to monthly in 2001.
"This increase was likely due to the timing of this year's school holidays.
"The price of petrol and diesel also increased this month, compared with a drop this time last year.
"Food price inflation continues to climb, with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises."
Matt Swannell, chief economic advisor to the EY ITEM Club, said: "In the minutes of its August meeting, the MPC sent a clear message that inflation was its priority again. However, there wasn't much in today's release that should add to the committee's concerns, with headline inflation in line with the Bank of England's staff projections and its measure of underlying services inflation softening.
"November's meeting will be a close call, with the hawkish shift at the August meeting leaving much greater uncertainty around the timing of the MPC's next cut."
In equity markets, Convatec surged to the top of the FTSE 100 as the medical products company launched a share buyback programme of up to $300m.
United Utilities gained after an upgrade to 'overweight' by Barclays.
Ithaca Energy shot higher after it upgraded full-year production guidance as profits and output doubled in the first six months of the year.
On the downside, housebuilders Berkeley, Barratt Redrow and Taylor Wimpey all fell, dented by the hotter-than-expected inflation data.
B2B tech firm Computacenter fell as it promoted its head of group commercial finance to the chief financial officer position following a nine-month search.
Keith Mortimer, who has been with the company since 1999 and has held various senior finance and commercial roles, will be appointed CFO on 1 September, some nine months after the exit of former CFO Christian Jehle who stepped down at the end of 2024 by mutual agreement.
OSB Group slumped as it said profits had fallen in the six months ended 30 June, with rising funding costs and a competitive mortgage market weighing on profitability.
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