The FTSE 100 nudged up on Wednesday after data showed that inflation has returned to the Government’s official target for the first time since July 2021.
The blue-chip index rose 14 points to 8,205, a 0.2% rise.
Wednesday’s gains came after official figures on consumer price inflation (CPI) showed the measure has fallen back to the Government’s target of 2%.
Rishi Sunak declared “we’ve got there” after the milestone was confirmed, insisting that it shows the economy has “turned the corner” after a long stretch of above-target inflation.
However, Bank of England policymakers are not expected to cut the base interest rate from 5.25% tomorrow.
Experts cautioned that a rate cut this summer could be less likely until the majority of the Bank’s Monetary Policy Committee (MPC) feel certain that inflation is under control.
Crucially, the rate of services inflation, which looks only at service-related categories like hospitality and culture, and is a key gauge for policymakers, has remained more stubborn than expected.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “A quiet session without the US has been enlivened by the return of UK inflation to 2%.
“As is so often the case, the headline figure doesn’t tell the full story, and higher services inflation has dampened hopes of an August cut by the BoE.
“Nonetheless, the FTSE 100 managed to eke out a small gain in thin trading, taking its cue from the stronger Asian session overnight.”
US markets were closed on Wednesday to mark the national holiday Juneteenth.
France’s CAC 40 finished 0.8% down, while Germany’s Dax slipped 0.4%.
In company news, housebuilder Berkeley has improved its outlook for the year despite “challenging” conditions across the housing market.
The boss of the London-listed firm said it is witnessing a “lack of urgency” in property demand and expects this to continue until interest rates start falling.
Nevertheless, the group improved its guidance for the current financial year on the back of a “strong” order book.
Shares finished the day 6% down.
Meanwhile, Pub group Young’s said it expects to be boosted by sports events over the summer after another jump in sales.
The boss of the London-based company said it saw a surge in sales during the first England Euro 2024 match on Sunday and has seen strong bookings for future fixtures.
Nevertheless, shares in the company dipped 2% as it revealed lower profits.
The price of a barrel of Brent crude oil was up 0.1% to 80.79 US dollars as markets were closing in London.
The biggest risers on the FTSE 100 were Smurfit Kappa, up 166p to 3744p, Anglo American, up 41p to 2430p, Beazley, up 11.5p to 692.5p, JD Sports, up 1.75p to 119.6p, and IAG, up 2.4p to 170.45p.
The biggest fallers on the FTSE 100 were Berkeley Group, down 288p to 4,722p, Persimmon, down 44p to 1,360p, Segro, down 27p to 892p, Spirax, down 245p to 8,410p, and Barratt, down 13p to 468p.