UK stocks saw a minor decline on Wednesday, while the British pound appreciated against both the euro and the dollar following data revealing a continued deceleration in UK inflation ahead of the upcoming general election.
According to the Office for National Statistics, consumer price inflation eased to 2.0% in May, aligning with expectations, down from 2.3% in April. This marks the first time inflation has reached the Bank of England's (BoE) 2.0% target since July 2021.
On a monthly basis, consumer prices increased by 0.3% in May, matching the rate observed in April, although they were anticipated to rise by 0.4%.
Ruth Gregory, an economist at Capital Economics, commented that the reduction in inflation to 2.0% in May is unlikely to convince the BoE to lower interest rates from the current 5.25% during their upcoming decision on Thursday.
The BoE has maintained the interest rate at 5.25% for six consecutive meetings, the highest level since early 2008.
Another data set indicated that factory gate prices rose by 1.7% year-on-year in May, an increase from the 1.1% rise in April. Meanwhile, input prices experienced a slight decline of 0.1% year-on-year in May, compared to a revised drop of 1.4% in April.
The benchmark FTSE 100 index declined by 19 points, or 0.2%, to 8,172 after a 0.6% gain on Tuesday.
In corporate news, Spectris, a precision instrumentation and controls group, plummeted 8.5% following a profit warning. Conversely, Games Workshop, known for their Warhammer range, surged 8.4% after projecting sustained revenue and profit growth for the year. Additionally, Vodafone saw a 1.3% increase after the telecom company sold an 18% stake in Indus Towers to repay debts.
