FTSE 100 Live: UK Inflation Drops to 2.3% as M&S Shares Surge

FTSE 100 Live: UK Inflation Drops to 2.3% as M&S Shares Surge

UK inflation in April stood at 2.3%, a figure that surpassed expectations and remains close to the Bank of England’s 2% target. According to the Office for National Statistics (ONS), this is the first time inflation has dipped below 3% since July 2021. Despite this reduction, the higher-than-expected inflation rate has led to traders reducing their bets on an imminent interest rate cut by the Bank of England. Core inflation, which excludes food and energy prices, was reported at 3.9%, while services inflation was at 5.9%.

This inflation data has prompted financial markets to reassess the likelihood of an interest rate cut in June, with money markets reducing the chance of such a move to just 15% from 50%. The Bank of England has maintained interest rates at a 16-year high of 5.25%, with Governor Andrew Bailey noting that further economic data will be crucial before any decision is made. The decrease in inflation was influenced by lower electricity and gas prices, a reduction in the Ofgem energy price cap, and decreased tobacco prices. Meanwhile, Marks & Spencer reported a 58% increase in annual profit, with shares surging around 9%, showcasing a significant turnaround under CEO Stuart Machin.

In the broader economic context, UK public sector borrowing figures for April were higher than anticipated, reaching £20.5 billion, above the Office for Budget Responsibility's forecast. European markets have been affected by disappointing full-year results, with the FTSE 100 seeing a decline of 0.5%. The pound also strengthened to its highest level against the euro in over two months, as traders anticipate that the Bank of England may take longer to begin easing monetary policy compared to the European Central Bank.


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