UK equities closed higher on Wednesday as investors assessed the latest inflation figures ahead of a pivotal Bank of England interest rate decision.
The FTSE 100 index finished the session up 0.34%, recovering ground after a cautious start to the trading day.
The Office for National Statistics reported that UK inflation rose to 3.1% in August, up from 2.9% in July, meeting market expectations and landing in line with analyst forecasts.
Core inflation held steady at 2.6%, suggesting that underlying price pressures remained contained despite the headline figure moving higher.
Higher transport costs, particularly motor fuels, were identified as the primary driver pushing the headline inflation rate upward during the period.
Berenberg noted that rising energy prices were the sole explanation for the step up in UK CPI inflation, describing the move as consistent with both the consensus and its 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 said it had recently forecast a November rate hike.
Separate ONS data showed producer input prices rose 6.1% year over year in August, accelerating from a revised 5.8% increase in July, while output prices climbed 3.7% after a 3.3% rise the previous month.
The annual retail price index also ticked higher, increasing to 3.4% from 3.2%, adding further context to the broader inflationary picture across the UK economy.
Barratt Redrow (BTRW.L) was the standout performer among FTSE 100 constituents, closing up 11.07% after the homebuilder posted higher revenue and attributable profit for the 52 weeks ended June 28.
The company completed 17,667 homes during the period, representing a 5% increase compared with the prior year and signalling continued demand for new residential properties.
RBC Capital Markets acknowledged the results were in line with expectations following a detailed July trading update, but flagged that the market’s attention would focus on the FY2027 outlook.
RBC said 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) gained 0.16% after the sports betting and gambling company announced plans to cut 400 customer-care roles as part of a broader operational restructuring, with a formal consultation process now underway.
Chief Executive Stella David separately warned Prime Minister Andy Burnham that a proposed increase in the UK machine games duty rate to 40% could lead to significant job losses and betting-shop closures across the sector.