FTSE 100's rally peters out
And finally, the London stock market’s best run in almost two and a half years has ended.
The FTSE 100 has closed 10.6 points lower tonight at 7898.7 points, down 0.13%.
That follows eight daily gains in a row, which was the Footsie’s best run since December 2020.
The prospect of more interest rate increases, driving up borrowing costs, pushed down shares in retailers and commercial property firms.
High inflation will also leave households with less to spend, as Kevin Pratt, finance expert at Forbes Advisor, says:
“Inflation remains in double digit figures at 10.1% - it’s deeply depressing stuff, especially given the widespread expectation that it might fall below 10%. Any good news, such as falling costs at the petrol pump, is turned sour by soaring food prices, with inflation here nudging a shattering 20%. At 19.2% - up from 18.2% the month before - that’s the biggest annual increase in food prices for 45 years.
“Clearly, when people are battered at the supermarket checkout for their basics - the ONS highlights bread as seeing the highest increases since records began - they are going to draw in their horns when it comes to discretionary spending elsewhere in the economy. That’s more bad news for the UK’s beleaguered businesses as they struggle to generate sales and keep the economy moving.
And on that note, we’re wrapping up for the day. Goodnight.
Bloomberg’s Phil Aldrick points out another reason UK inflation is taking longer to come down:
This is why UK inflation is stubbornly high compared with EU rivals. The energy price cap, which resets every three months, means it takes longer for falling gas prices to feed into headline CPI https://t.co/tik8VwW69X pic.twitter.com/2ntCgCYGRZ
— Philip Aldrick (@PhilAldrick) April 19, 2023
All else equal, the household energy price reset in April will bring inflation down from 10.1% to 8.1%. German inflation is currently 7.8%. There will be other automatic reductions in June and July due to food and energy base effects. All else equal, CPI would be about 6% then
— Philip Aldrick (@PhilAldrick) April 19, 2023
Underlying inflation is a different matter. Sticky wages, sticky food prices as companies protect margins. Shops don't like cutting prices, so cheaper food will probably come through promotions. Story w/ @tomelleryrees @dasha_reports https://t.co/tik8VwW69X
— Philip Aldrick (@PhilAldrick) April 19, 2023
