London open: Stocks rise as shop price inflation eases; WPP surges

London stocks rose in early trade on Tuesday, taking their cue from a solid session on Wall Street, as data showed that UK shop price inflation eased sharply in January.

At 0840 GMT, the FTSE 100 was up 0.3% at 7,655.98, as investors looked ahead to a raft of data releases.

Net lending figures for December are due at 0930 GMT, along with consumer credit, mortgage approvals and money supply.

Tickmill Group said: "Before the Bank of England's update on Thursday, today's readings on money supply and lending will provide insights into how past interest rate hikes have impacted the economy. Of particular interest will be the figures on lending in the housing market, as there are indications that recent decreases in market interest rates are benefiting this sector. Expect that mortgage approvals will increase for the third consecutive month in December, reaching their highest level in four months.

"Stateside, a crucial measure of consumer confidence is expected to increase for the third consecutive month in January, reaching its highest level since last July. This likely reflects the impact of lower inflation rates and expectations of interest rate cuts."

Industry data out earlier showed that shop price inflation slowed notable at the start of the year, as price growth reached its lowest level since May 2022.

The British Retail Consortium (BRC) and NielsenIQ shop price index for 1 January to 7 January showed a significant drop in annual shop price inflation to 2.9%, from 4.3% in December.

Within the index, non-food inflation saw a substantial decrease, falling to 1.3% in January from 3.1% in December.

That marked a sharp drop below the three-month average rate of 2.4%, and positioned non-food inflation at its lowest point since February 2022.

Food inflation experienced a deceleration as well, declining to 6.1% in January from 6.7% in December.

The reduction in food inflation was part of a consistent trend, with January marking the ninth consecutive month of deceleration in the category.

It also brought food inflation to its lowest level since June 2022.

"Some New Year cheer as January shop price inflation slid to its lowest level since May 2022," said British Retail Consortium chief executive officer Helen Dickinson. "Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.

"Good news for the morning brew as the price of tea and milk fell, while evening tipples remained more expensive on the back of increased alcohol duties."

Looking at the specific fresh food and ambient food categories, both also demonstrated notable declines in inflation rates.

Fresh food inflation slowed to 4.9% in January from 5.4% in December, with that rate being below the three-month average of 5.6%.

Similarly, ambient food inflation decelerated from 8.4% in December to 7.7% in January, falling below the three-month average rate of 8.5%.

The current ambient food inflation rate represented the lowest level recorded since July 2022.

In equity markets, WPP jumped to the top of the FTSE 100 as the advertising group backed its full-year guidance and set out its targets for 2024.

Art and antique online marketplace operator Auction Technology racked up strong gains after saying it expects annual results to be in line with expectations after an 11% increase in revenue for the first three months of the year.

HSBC was in focus as the bank was fined £57.4m by the Bank of England after admitting serious failings in protecting customer deposits.

Travel food outlet operator SSP Group gained as it held full-year guidance after a strong rise in first-quarter sales as rail and air passenger numbers continued to recover after the Covid pandemic.

Saga shot higher after saying it expects full-year underlying pre-tax profit to more than double on the previous year as it hailed an "outstanding" year for the cruise and travel businesses.

Diageo fizzed lower as the drinks group said first-half profits fell by more than a tenth as weakness in the Latin American and Caribbean (LAC) regions persisted, but pointed to improving trading conditions in the latter part of the financial year.

Pets at Home slumped as it cut its full-year profit outlook after a weaker-than-expected performance at its retail business in the third quarter. Pets now expects FY24 group underlying pre-tax profit of around £132m, down from previous guidance of £136m.

Deliveroo was under the cosh after Delivery Hero sold its entire 4.5% stake in the company.

Market Movers

FTSE 100 (UKX) 7,655.98 0.30%
FTSE 250 (MCX) 19,330.29 0.10%
techMARK (TASX) 4,389.69 0.36%

FTSE 100 - Risers

WPP (WPP) 829.40p 6.25%
Ashtead Group (AHT) 5,330.00p 2.22%
3i Group (III) 2,479.00p 1.89%
Pershing Square Holdings Ltd NPV (PSH) 3,776.00p 1.45%
Melrose Industries (MRO) 596.80p 1.39%
Convatec Group (CTEC) 243.20p 1.33%
InterContinental Hotels Group (IHG) 7,550.00p 1.26%
Auto Trader Group (AUTO) 729.60p 1.25%
Experian (EXPN) 3,297.00p 1.23%
IMI (IMI) 1,681.00p 1.20%

FTSE 100 - Fallers

Diageo (DGE) 2,748.00p -3.29%
Mondi (MNDI) 1,444.20p -1.88%
Persimmon (PSN) 1,424.00p -1.79%
Fresnillo (FRES) 539.60p -1.64%
Barratt Developments (BDEV) 531.00p -1.63%
Berkeley Group Holdings (The) (BKG) 4,780.00p -1.08%
Schroders (SDR) 406.00p -0.78%
Tesco (TSCO) 290.40p -0.72%
Smurfit Kappa Group (CDI) (SKG) 3,034.00p -0.65%
Burberry Group (BRBY) 1,335.00p -0.60%

FTSE 250 - Risers

Auction Technology Group (ATG) 492.00p 7.78%
Baltic Classifieds Group (BCG) 243.00p 4.07%
Kainos Group (KNOS) 1,123.00p 2.93%
Hill and Smith (HILS) 1,880.00p 2.73%
PureTech Health (PRTC) 202.00p 2.54%
SSP Group (SSPG) 231.00p 2.48%
Carnival (CCL) 1,183.50p 2.38%
Chemring Group (CHG) 360.00p 1.98%
Indivior (INDV) 1,379.00p 1.77%
Aston Martin Lagonda Global Holdings (AML) 191.90p 1.75%

FTSE 250 - Fallers

Asia Dragon Trust (DGN) 334.00p -3.19%
Pets at Home Group (PETS) 284.20p -3.00%
Future (FUTR) 706.50p -2.42%
Fidelity China Special Situations (FCSS) 191.40p -1.85%
Murray International Trust (MYI) 238.50p -1.45%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 130.20p -1.36%
C&C Group (CDI) (CCR) 150.80p -1.31%
Investec (INVP) 516.20p -1.26%
SThree (STEM) 393.00p -1.26%
Ithaca Energy (ITH) 141.10p -1.19%