London pre-open: Stocks to nudge lower after inflation data

London stocks were set to nudge lower at the open on Wednesday as investors digest the latest UK Inflation figures.

The FTSE 100 was called to open six points lower at 7,119.

Data released earlier by the Office for National Statistics showed that consumer price inflation rose to 2.5% in June from 2.1% in May, hitting its highest level in nearly three years and coming in above the Bank of England’s 2% target for the second month in a row. It was also above consensus expectations of 2.2%.

ONS deputy national statistician for Economic Statistics Jonathan Athow said: "The rise was widespread, for example coming from price increases for food and for second-hand cars where there are reports of increased demand.

"Some of the increase is from temporary effects, for example rising fuel prices which continue to increase inflation, but much of this is due to prices recovering from lows earlier in the pandemic. An increase in prices for clothing and footwear, compared with the normal seasonal pattern of summer sales, also added to the upward pressure this month."

In corporate news, homewares retailer Dunelm said annual profits would be ahead of forecasts as fourth quarter sales more than doubled driven by pent-up demand after stores reopened from Covid lockdown.

Sales were up 101.7% to £380.1m in the 13 months to June 26 and rose 26.3% for the full year to £1.33bn. Fourth-quarter digital sales increased 38%. The company expects pre-tax profits of around £158m, compared with forecasts of £149m - £153m.

Emerging markets-focussed asset manager Ashmore updated the market on its fourth quarter, reporting that assets under management increased by $4.5bn (£3.25bn) over the period, comprising net inflows of $1.1bn and positive investment performance of $3.4bn.

The company said net inflows in the three months ended 30 June were driven by institutional clients and included a combination of new mandates, particularly in the overlay, equities and external debt themes, and additional allocations to existing funds across the fixed income and equities investment themes. It said there was a small net outflow from intermediary retail clients.