London open: Stocks flat after UK inflation data; Fed, BoE eyed
By Michele Maatouk
Date: Wednesday 17 Sep 2025
(Sharecast News) - London stocks were flat in early trade on Wednesday as investors mulled the latest UK inflation reading and looked ahead to policy announcements from the Federal Reserve and the Bank of England.
At 0835 BST, the FTSE 100 was steady at 9,203.08.
Figures from the Office for National Statistics showed that inflation remained unchanged in August, underpinned by higher food prices.
The consumer prices index was 3.8% in the 12 months to August, unchanged on July and in line with expectations. On a monthly basis, CPI rose by 0.3%, also in line with consensus.
However, the core inflation rate - which strips out the more volatile elements of energy, food, alcohol and tobacco - softened to 3.6% from 3.8%.
Grant Fitzner, chief economist at the ONS, said a number of price movements had offset each other during the month.
He continued: "The cost of airfares was the main downward driver, with prices rising less than a year ago following the large increase in July, linked to the timing of the summer holidays.
"This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year.
"Food price inflation climbed for the fifth consecutive month, with small increases seen across a range of vegetables, cheese and fish items."
Food prices soared 5.1% in August, up from 4.9% in July. It was the highest recorded rate since January 2024, although remains well below the peak seen in early 2023.
Including housing costs, inflation rose by 4.1% in the 12 months to August, down from 4.2% a month previously. Month-on-month CPIH rose 0.3%.
Danni Hewson, AJ Bell head of financial analysis, said: "There are no surprises in this latest set of inflation figures, just a growing pain in the purse - especially when it comes to the supermarket checkout.
"For households, the unwelcome increase in food prices for the fifth month in a row leaves little wiggle room. Whilst we are nowhere near those double digit increases that peaked in early 2023, consumers are becoming increasingly concerned.
"They've already traded down to generic brands and changed buying habits, and despite inflation-busting pay increases for many, few people feel they're better off today than they were a couple of years ago.
"Businesses from food producers to supermarkets and restaurants have warned that they would need to pass on rising labour costs to their end consumer and this latest set of figures suggests that's exactly what is happening.
"There was some good news in the latest data. Airfares, which played such a huge part in pushing up headline inflation in July's data, have fallen back, thanks primarily to the timing of school holidays. But the price at the pump has risen and the cost of goods has edged up as well.
"For the Bank of England there is a silver lining to be found in both the core inflation number and service inflation, which have both fallen, but markets are under no illusion. At 3.8% inflation is way above the Bank's target and prices are expected to keep rising in the near term.
"Looking further down the track, markets are hedging their bets on the potential for one final interest rate cut in 2025 as labour market weakness begins to impact remuneration decisions."
The Bank of England rate announcement is due on Thursday. Before that, investors will be eyeing the latest policy announcement from the US Federal Reserve after the close of London and European markets on Wednesday. The Fed is widely expected to cut rates by 25 basis points.
Danske Bank said the cut is fully priced in and markets have even speculated about the slim chance for a larger 50 basis points move. "We will pay close attention to the Fed's updated rate projections, which could offer key insight into the Fed's preferred pace of easing over coming months - we still forecast only gradual cuts once per quarter," it said.
In equity markets, British Gas owner Centrica was the top gainer on the FTSE 100 after an upgrade to 'overweight' at Morgan Stanley.
Housebuilder Barratt Redrow rallied as it delivered annual profits ahead of forecasts despite completions missing its initial guidance range, helping the company to lift its dividend more than expected. Persimmon and Taylor Wimpey also rose.
Online greeting cards and gift retailer Moonpig advanced as it said it was on track to deliver its FY26 guidance as group trading momentum has continued through the start of the year, in line with expectations.
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