London open: Stocks flat as investors digest inflation data

At 0910 GMT, the FTSE 100 was flat at 7,849.51, while the pound was 0.4% firmer against the dollar at 1.2333.

Figures released earlier by the Office for National Statistics showed that consumer price inflation eased to 10.5% in December from 10.7% the month before, falling for the second month in a row. Economists had been expecting the inflation rate to be unchanged. Still, it remains close to a 40-year high and well above the Bank of England's 2% target.

A drop in petrol and clothing prices was behind the decline, helping to offset higher prices in hotels, restaurants, food and non-alcoholic drinks.

Meanwhile, the core rate of inflation - which excludes food, energy, alcohol and tobacco - was flat at 6.3%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "As energy prices retreat, inflation is finally climbing down from its dizzying heights but it’s far from a vertiginous descent."

She said that with the headline rate of inflation still firmly in double digits there is still a long way to go before the price spiral is under control, particularly given that services inflation heated up again, rising from 6.3% in November to 6.8% in December.

Capital Economics said the small fall in CPI inflation and unchanged core rate "suggests it is too early for the Bank of England to declare victory in its fight against inflation".

"This supports our view that the Bank will raise Bank Rate from 3.50% now to a peak of 4.50% in the coming months."

In equity markets, online supermarket Ocado was the top gainer on the FTSE 100, having tanked on Wednesday after a disappointing update on its joint venture with Marks & Spencer, Ocado Retail.

Luxury fashion brand Burberry rose despite saying it took a hit from Covid-19 disruption in its key market of China. Like-for-like sales grew by only 1% to £756m in the three months to end-December, compared with a rise of 7% a year earlier and against a forecast increase of 2%.

Diversified engineer Smiths Group rallied after lifting its full-year guidance, while electricals retailer Currys surged after it backed its full-year guidance, with a solid performance in the UK and Ireland helping to offset weakness in the international segment.

Shares in TI Fluid Systems tumbled as the company said sales in China had been hit in the fourth quarter due to Covid restrictions and a switch to electric vehicles in the country. The manufacturer of automotive fluid storage systems for light vehicles said 2022 revenue is expected to be around €3.26bn, up 10% year on year.

However, it warned that group constant currency revenue growth was expected to 100 basis points behind global light vehicle production (GLVP) growth due to the rapid transition of domestic Chinese original equipment manufacturers (OEM) to electric vehicles "which presents a short-term mix issue for the group in that market".

In broker note action, British Land was boosted by an upgrade to ‘buy’ at Bank of America Merrill Lynch, but Segro was hit by a rating downgrade by the same outfit.

Market Movers

FTSE 100 (UKX) 7,849.51 -0.02%
FTSE 250 (MCX) 19,962.02 0.07%
techMARK (TASX) 4,531.66 -0.14%

FTSE 100 - Risers

Ocado Group (OCDO) 762.20p 3.98%
Smiths Group (SMIN) 1,730.50p 2.94%
International Consolidated Airlines Group SA (CDI) (IAG) 160.66p 2.37%
Auto Trader Group (AUTO) 568.80p 1.64%
InterContinental Hotels Group (IHG) 5,548.00p 1.61%
Melrose Industries (MRO) 152.15p 1.30%
Centrica (CNA) 98.42p 1.23%
Experian (EXPN) 2,996.00p 1.18%
British Land Company (BLND) 446.70p 1.15%
Rightmove (RMV) 559.20p 1.12%

FTSE 100 - Fallers

SEGRO (SGRO) 834.80p -1.79%
GSK (GSK) 1,412.40p -1.77%
United Utilities Group (UU.) 1,026.00p -1.30%
CRH (CDI) (CRH) 3,644.00p -1.17%
Coca-Cola HBC AG (CDI) (CCH) 1,942.00p -1.09%
Haleon (HLN) 323.80p -1.04%
Pershing Square Holdings Ltd NPV (PSH) 2,970.00p -1.00%
Abrdn (ABDN) 205.80p -0.91%
Airtel Africa (AAF) 117.20p -0.85%
Severn Trent (SVT) 2,749.00p -0.79%

FTSE 250 - Risers

Currys (CURY) 64.65p 7.84%
CMC Markets (CMCX) 240.00p 2.56%
Carnival (CCL) 791.00p 2.43%
Petershill Partners (PHLL) 168.60p 2.43%
Baltic Classifieds Group (BCG) 153.60p 2.40%
Greggs (GRG) 2,630.00p 1.94%
easyJet (EZJ) 444.10p 1.88%
Coats Group (COA) 69.40p 1.61%
Safestore Holdings (SAFE) 1,019.00p 1.60%
TUI AG Reg Shs (DI) (TUI) 186.45p 1.58%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 122.60p -9.59%
Wood Group (John) (WG.) 146.05p -4.88%
4Imprint Group (FOUR) 4,420.00p -2.43%
Urban Logistics Reit (SHED) 137.00p -2.14%
Synthomer (SYNT) 147.90p -1.60%
Abrdn Private Equity Opportunities Trust (APEO) 432.00p -1.59%
Crest Nicholson Holdings (CRST) 244.80p -1.53%
Warehouse Reit (WHR) 106.60p -1.48%
Hilton Food Group (HFG) 611.00p -1.45%
Hochschild Mining (HOC) 80.80p -1.34%