London pre-open: Stocks seen lower as investors mull shop price data

London stocks were set to fall at the open on Tuesday following a mixed session in Asia, as investors mulled the latest shop price inflation data and looked ahead to the UK election this week.

The FTSE 100 was called to open around 32 points lower.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Cable remains under pressure ahead of Thursday’s general election while the FTSE 100 couldn’t really benefit from a softer sterling and a rapid rise in oil prices yesterday and closed the session near flat. The election uncertainty seemingly keeps the bulls on the sidelines even though a Labour win is seen as a net positive for the British stocks.

"The price pullbacks in the FTSE 100 are likely interesting opportunities to strengthen long positions in energy-heavy British stocks that should fully benefit from reflation trades once the election is behind.

"Zooming out, the FTSE 100 didn’t do bad at all over the past few quarters. The index posted a fourth quarter gain in the Q2, has hit a record high in May and remains upbeat as we enter the second half on expectation of more political stability, an upcoming Bank of England (BoE) rate cut and improved reflation flows."

According to the latest shop price index from the British Retail Consortium and NielsenIQ, the annual growth in prices at UK tills slowed significantly in June.

Shop price inflation eased to a year-on-year rate of just 0.2% last month, down from 0.6% in May and the lowest rate of price growth since October 2021.

Non-food prices were down 1% on last year, with deflation accelerating from the -0.8% level reported in May, while food inflation slowed to 2.5% from 3.2% a month earlier.

Slowdowns were reported in both fresh food (1.5%, down from 2.0%) and ambient food (3.9%, down from 4.8%).

The BRC said the deceleration in price growth was a result of heavy investments by retailers to improve operations and supply chains during the height of the cost-of-living crisis, to mitigate the impact of input cost pressures.

"This is clearly paying off, with shop prices having risen just 0.2% over the past 12 months," said the BRC's chief executive Helen Dickinson.

“Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households," Dickinson said.

"The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too. The next government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy."

In corporate news, Sainsburys backed its full-year outlook as it posted a 3% rise in first-quarter like-for-like sales.

Elsewhere, Endeavour Mining announced its first gold pour at the Lafigué mine in Côte d’Ivoire, completing the project on budget and ahead of schedule 21 months after construction started.

The FTSE 250 company said the mine was expected to reach commercial production and ramp up to a plant capacity of four million tonnes per annum by the third quarter, with initial production estimated between 90,000 and 110,000 ounces of gold in 2024, increasing to 200,000 ounces in 2025. It was the fifth successful project Endeavour had built in West Africa in the last decade.

Capita said it has renewed its contract with the Cabinet Office to administer the Royal Mail Statutory Pension Scheme (RMSPS) for six years starting in 2026, with a potential two-year extension.

The £48m deal would see Capita continue to serve over 350,000 RMSPS members while migrating services to a single platform using Microsoft Dynamics and other technologies. Capita had been administering the RMSPS since 2017, providing services such as finance, accounting, pension payroll, and data management.