The Ftse 100 plummeted into the red and the British pound has slipped against the dollar following today’s shock drop in the consumer price index (CPI) inflation rate.
Earlier this morning, the Office for National Statistics (ONS) confirmed inflation for the 12 months to April 2026 eased to 2.8 per cent, coming in lower than economists’ projections.
Despite this move indicating that the Bank of England will not raise interest rates at the Monetary Policy Committee’s (MPC) next meeting in June, this was not enough to prop up London’s benchmark stock market index.
By 9:30 am this morning, the Ftse 100 fell just over 45 points (0.44 per cent) at 10,284.60, with sterling hovering around $1.34 against the US dollar.
The Ftse 100 and sterling have taken a hit following today’s ONS announcement
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GETTY / GOOGLE
Today’s dip into the red was primarily driven by credit score giant Experian falling 3.5 per cent after lacklustre financial results spooked investors.
The firm was joined by Tesco, RELX, Auto Trader, Sage, and Compass in the list of Ftse 100 underperformers.
Conversely, Marks and Spencer was up 3.2 per cent after publishing an impressive set of financial results.
Danni Hewson, AJ Bell’s head of financial analysis, warned that today’s inflation “bright spot is set to be relegated” as the cost of the US-Iran war trickles down to consumers.
The Ftse and pound have slipped into the red this morning despite today’s inflation announcement
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GETTY / GOOGLE
Inflation fell to 2.8 per cent for the 12 months to April 2026 | PA
She explained: “Looking at the positive side of the equation, the biggest contributor to the fall in inflation in April came from the energy price cap, which was calculated in the period before the Iran war began.
“The cap included measures announced by the chancellor in the Budget which helped deliver an average fall of £117 a year for dual fuel customers.
“On the negative side of today’s workbook, the price of energy is set to rise in July and again in October, increasing pressure on struggling families.
“With input costs going into factories already up along with import prices, the 2.4 per cent rise in core CPI goods inflation is just the tip of the iceberg. Although the Bank of England’s worst-case scenario looks unlikely at the moment as Brent crude hovers around the $110 a barrel mark, inflation is still expected to surpass four per cent by the end of the year.”
AJ’s investment director Russ Mould added: “The Ftse 100 dipped on Wednesday as a lasting solution to the Iran crisis remained elusive. The latest ultimatum to Tehran from President Trump has done little to quell investor nervousness and oil prices remain above the $110 per barrel mark.
“US stocks fell on Tuesday as investors reacted to rising Government bond yields which reflect growing fears about inflation and the knock-on effect on interest rates.
“There was some modest relief on the inflation front as UK CPI came in lower than expected, but this relief is likely to be temporary unless the Strait of Hormuz can be reopened in the near future.
“Utility, mining, defence and energy stocks were the bright spots in London, while retailers were among those on the back foot.”