UK equities rebounded on Wednesday, with the FTSE 100 closing 0.34% higher as investors assessed the latest inflation figures ahead of a key Bank of England decision.
The Office for National Statistics reported that UK inflation rose to 3.1% in August, up from 2.9% in July, landing precisely in line with market expectations.
Core inflation held steady at 2.6%, suggesting the broader price environment remained relatively contained despite the headline increase.
Higher transport costs, particularly motor fuels, were identified as the primary driver behind the uptick in headline inflation figures.
Berenberg noted that “rising energy prices were the sole explanation for the step up in UK CPI inflation from 2.9% yoy in July to 3.1% yoy in August, in line with the consensus and our own forecast.”
The bank added that “although the increase left inflation stronger than the 2.8% yoy rate the BoE predicted, the jump in energy prices that caused the forecast error is out of their control.”
Berenberg also stated that “the inflation data continues to show few signs of a broader increase in prices that indicates a risk of inflation persisting after the energy price shock fades,” and flagged a predicted November rate hike.
Separate ONS data showed producer input prices climbed 6.1% year over year in August, accelerating from a revised 5.8% rise in July, while output prices increased 3.7% after a 3.3% gain.
The annual retail price index also ticked higher, rising to 3.4% from 3.2%, adding further texture to the overall inflationary picture facing policymakers.
Barratt Redrow (BTRW.L) was the standout performer among FTSE 100 constituents, surging 11.07% at the close after reporting stronger revenue and attributable profit for the 52 weeks ended June 28.
The homebuilder completed 17,667 homes during the period, representing a 5% increase compared to the prior year.
RBC Capital Markets noted that “Barratt delivered FY2026 in line with expectations following the detailed July trading update,” but pointed out that the real focus was the company’s forward guidance.
RBC added that “the Group is cutting guidance: completions trimmed to 17,500-17,900 (from 17,700-18,200) and outlets cut again to c.405 (from c.415) confirming that planning delays continue to frustrate growth ambitions.”
Entain (ENT.L) edged up 0.16% after the sports betting and gambling company announced plans to cut 400 customer-care roles as part of broader operational changes.
Chief Executive Stella David separately warned Prime Minister Andy Burnham that a proposed increase in the UK machine games duty rate to 40% could trigger significant job losses and betting-shop closures across the sector.
